How to beat a Texas electric company when your variable rate goes up too much

Attention Texas electricity customers with variable rates: If you expect to get walloped when the next bill arrives, Watchdog Nation has a strategy that may get that bill lowered.

As first reported in the Fort Worth Star-Telegram Dave Lieber Watchdog column, at the August 2011 meeting of the Texas Public Utility Commission, new Chairwoman Donna L. Nelson held a copy of this previous Watchdog Nation report on Dynowatt and spoke about the Arlington man whose power bill jumped to $1,111 in one month because of electricity rate spikes.

“I’m sure you saw the article in the Fort Worth Star-Telegram this morning about the gentleman who was with Dynowatt, and it was a variable rate plan,” she said. His rate jumped from 10.6 to 18.3 cents per kilowatt-hour, she explained.

(In the above photo, Texas PUC Chairwoman Donna L. Nelson holds up a Watchdog Nation report from the Fort Worth Star-Telegram and asks the enforcement division to look into it.)

“Under the new rules we adopted there were certain disclosures that had to take place on the bill, if you remember. And so this article calls into question whether those actually happened.

“I guess I would like enforcement staff to look into this and make sure that the disclosures that are supposed to be happening are happening.”

There it is! The key to getting a power bill lowered. It’s like that moment in school when the teacher tells students what will be on the test.

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This is a test that some Texas electricity companies will flunk. They may be confused about state requirements detailing how variable rate increases must be disclosed to customers on their bills. That confusion and a failure to comply works to customers’ advantage.

The Texas Retail Electric Scorecard, a widely circulated industry newsletter, reported Nelson’s remarks and outlined for electric companies a summary of the rules. But probably not in time for August bills to be corrected.

For example, certain sentences must appear in 12-point type on a bill. (That didn’t happen on the Dynowatt bill.) Here’s a sample: “Please review the historical price of this product available at (insert specific website address and toll-free telephone number).”

If a customer gets a bill with a price spike but without that sentence about the company website and telephone number, he or she should submit a copy of that bill to the PUC as part of a formal complaint. Regulators will check whether the company followed the rules. If not, the bill will be lowered.

See other requirements in the state rules at tinyurl.com/3gsvwvg.

 The Amigo Energy example

 Here’s what can happen to a company that doesn’t follow the rules.

In 2008, I interviewed then-Amigo Energy founder and CEO Javier Vega about why his company didn’t include rate information on the company’s “facts label” as required. I showed him that state rules weren’t followed when Amigo raised its rate from 16 to 24 cents for a Fort Worth customer.

He answered, “I’m going to scream for a second.” He put me on hold, consulted his staff, returned and said: “I apologize. We’ve been better at this.”

After that, Fulcrum Energy, the company that bought Vega out, reneged on its agreement to keep Vega as an officer in the company. Vega sued for wrongful termination. The trial was held in Houston in July.

Vega says that his 2008 comments to me were one of two reasons cited for his firing.

On Aug. 1, a Houston jury awarded Vega a judgment that, with lawyer fees, could reach $3 million.

Last week, Amigo/Fulcrum was sold to Just Energy, a Texas electricity provider based in Toronto.

Vega’s lawsuit illustrates what can happen behind the scenes at a Texas electric company when operators don’t buy enough electricity before a power spike. That can cause bills for variable-rate customers to jump.

According to Vega’s lawsuit, Fulcrum insisted on a get-tough strategy aimed at customers who owed the company money, even if the charges were incorrect. Vega alleged that Fulcrum co-founder Gerardo Manalac ordered collection letters sent to customers only days after the first bills arrived. He also refused a PUC directive that Amigo rerate the bills.

Manalac previously denied those allegations in an interview.

Eventually, the PUC cited Amigo for numerous violations: not sending bills, refusing to offer payment arrangements to shell-shocked customers, not giving proper notice before an increase and not responding to complaints.

Amigo/Fulcrum paid a $15,000 state fine. Now comes this jury verdict.

The message is clear. An electricity company that raises a variable rate has to follow the rules. It’s up to customers to make sure this happens.

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Are you tired of fighting the bank, the credit card company, the electric company and the phone company? They can be worse than scammers the way they treat customers. A popular book, Dave Lieber’s Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong, shows you how to fight back — and win! The book is available at WatchdogNation.com as a hardcover, CD audio book, e-book and hey, what else do you need? The author is The Watchdog columnist for the Fort Worth Star-Telegram. Visit our store. Now revised and expanded, the book won two national book awards for social change. Twitter @DaveLieber.

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Thanks to Texas electricity spikes, variable rate customers about to get burned

Nearly every day in the Texas summer of 2011, warnings come about overuse of electricity. As readers of the Fort Worth Star-Telegram Dave Lieber Watchdog column first learned, those customers on variable rate plans could get power bills that leave them boiling.

 Ryan Walton may be the canary in the coal mine when it comes to residential electric bills skyrocketing because of the heat wave.

The Arlington man is on a variable-rate plan with Dynowatt, an Ohio company. In June, he paid 9.8 cents per kilowatt-hour. In July, his variable rate jumped to 10.6 cents. But this month, the rate vaulted to 18.3 cents.

His most recent electric bill was for $1,111.

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This has happened before with Texans who chose variable-rate plans. Honestly, I don’t understand why anyone would want to take that risk.

He explains, “Two years ago, we signed a 24-month contract for about 8.9 cents. It was good. When it ran out, we went variable, and the rate actually went down. It went into the 7’s, so I thought ‘Why should I lock in?’ It’s kind of like mortgage rates. If you’re in an adjustable, if it goes up a little, you’ve got time to adjust.

“You figure it will go up 10 or 15 percent a month, and there’s time to look for other companies.” His rate shot up 72 percent on his Aug. 11 bill. “There was literally no warning. That was the big surprise.”

I called electricity market watchers to see whether other customers were having the same problem. Not yet. But sometimes smaller power companies have to jack up variable rates when they get over-leveraged in the electricity market, they said.

A Dynowatt spokesman says that is not what happened here. The heat wave led to “extraordinary volatility” for variable-rate customers.

“I am fully confident that consumers who have selected variable-priced products [with other electricity companies] will see the volatility reflected in their monthly bills,” he said.

Others are not so sure. Texas Public Utility Commission spokesman Terry Hadley recalls how some worried that spikes in power usage during February’s icy days would lead to similar jumps in residential customer rates.

“We haven’t seen that,” he said. “The rates remained low.”

Not for Walton. I checked the PUC’s rules to see whether Dynowatt played fair. State rules say that before a variable rate can go up, a monthly bill must “include a statement informing the customer how to obtain information about the price that will apply on the next bill.”

On Walton’s bill, in small print, this rule is followed: “Your variable rate may have changed pursuant to your Terms of Service. To obtain information about the price of your variable product that will appear on the next bill, please contact us.” The bill gives a phone number and elsewhere, a website.

Dynowatt may not have complied with a second rule that requires companies to include “clearly and conspicuously” these words: “Important notice regarding changes to your contract.”

I didn’t see those specific words on Walton’s bills. He can file a complaint with the PUC, which would investigate whether the company violated this rule. Walton could get a lower bill.

Dynowatt no longer offers a variable-rate plan to North Texans. The company offers several fixed-rate plans and, in its promotions, urges its remaining variable-rate customers to lock in a fixed rate.

Electricity shoppers are often attracted to variable-rate plans because the initial prices are so low. This week, on the state website powertochoose.org, I found variable rates starting at 4.5 cents. The lowest fixed rate was nearly double, at 8.1 cents.

 Walton’s case “is a really good reason why people shouldn’t take variable-rate plans,” said Carol Biedrzycki of the Texas Ratepayers Organization to Save Energy. “They’re not predictable. … To me it’s like investing in individual stocks instead of an insured bank account. You have to have the time to watch the stocks. If you don’t have time, chances are good you’re going to lose.”

Walton is chirping like that canary in the coal mine as “a warning to other people out there,” he said. “You need to read the fine print on the bill, which I didn’t do. And if you haven’t locked something in by now, you should.”

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Dave Lieber shows Americans how to fight back against corporate deceptions in his wonderful book, Dave Lieber’s Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong. Are you tired of losing time, money and aggravation to all the assaults on our wallets? Learn how to fight back with ease — and win. Get the book here.

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