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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How to fight your electric bill

How to fight your electric bill

People complain about high electricity bills. Often they’re ignored. Here’s how a prosecutor shows you how to take care of bad customer service reps who don’t care.

A Texas “power” story

Power plants across Texas fail. People have to cope with rolling blackouts. That makes Watchdog Nation long for the good old days when people complained about smart meters and their bills going up. Good old days? That would be before the great ice storms of 2011 in North Texas.

Although The Watchdog can’t solve the rolling blackouts, we will continue to shine a light on the Texas electricity system.

Customer service is questionable

Today’s victims, er, electricity customers: John and Mary Brasher of Wichita Falls. John Brasher is a 25-year veteran prosecutor in the Wichita County district attorney’s office who handles appeals. After his smart meter was installed, his next bill came in four times higher than the previous month’s. So the couple launched an appeal with TXU Energy.

As readers of the Fort Worth Star-Telegram Dave Lieber Watchdog column first learned, Mary Brasher called customer service. She got no help. “I knew I was talking to someone overseas. His phrases didn’t sound right. I felt like he was reading me a canned answer. He kept repeating the same phrases over and over,” she said.

Next, the couple wrote TXU. They even diagnosed their own problem, telling TXU that their old meter reading was most likely inaccurate.

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Difficulty communicating

Here are excerpts from their ensuing correspondence.

TXU: “Dear Mr. Brasher … the meter was accurately read.”

Brasher: “Did you even read my last email? … Where is the old meter? Can it be tested?”

TXU: “All bill dates and due amounts are continuing as normal.”

Brasher: “You are absolutely wrong. … That is crazy, and I do not appreciate your canned answer one bit. I am notifying the Texas Public Utility Commission. Additionally, I would appreciate a chance to review and read the old meter myself. I am sure you have it stored some place. I expect to receive a real answer from you, not a canned answer.”

You can be an electricity company prosecutor, too

That didn’t happen, so John Brasher filed a complaint with the PUC: “TXU will provide us no information about whether the ‘old’ meter can be located and read. … We would like a reasonable explanation, rather than the arrogant and condescending responses we have been given by TXU.”

The prosecutor continues, “If, in fact, the old meter can no longer be read merely because it has been removed, then that is a loophole that needs to be closed. Otherwise, TXU can claim any electrical usage it wants to without the consumer having any recourse. We can only assume that this is in fact what TXU is doing, since it will not provide any answers to us.”

His PUC complaint got everyone’s attention, and finally the facts came out.

Who is to blame?

Oncor Electric Delivery says its reader misread the Brashers’ meter two weeks before the old meter was swapped for the smart meter. Oncor realized the error and notified TXU. But TXU didn’t tell the Brashers.

Turns out the old meters are stored in a warehouse, and photographs are taken showing the final reading. Until PUC got involved, though, nobody bothered to tell the Brashers that. “Seems to be a straightforward question,” Mary Brasher said.

TXU spokesman Michael Patterson accepts blame: “Obviously, we fell a little short. … There was a disconnect here, and I know that’s frustrating to the customer.” (Yes, he said “disconnect.”)

“The rep that responded didn’t connect the dots that maybe there was an issue when they changed the meter.”

TXU is tracking the error, he says, and spreading the word among its personnel about what went wrong. As for taking the complaint to the PUC, he adds, “We certainly don’t want that for a number of reasons.”

The Brashers’ bill is now reconciled. But the couple and TXU aren’t. The Brashers say they’re switching electricity companies.

There’s good news here. If part of the problem is, in fact, canned answers from overseas customer service reps who don’t always understand the complexities of the company they serve, TXU offers a better solution: The company has announced that it is adding new call centers in Abilene and Lubbock and expanding a call center in Irving. The moves are supposed to create and save 500 jobs.

Where are the remaining TXU customer service jobs?

“We don’t disclose specific numbers for our customer contact centers, but with this reconfiguration, the company will have a 70 percent domestic, 30 percent Latin America mix,” Patterson said.

Watchdog Nation has previously reported that TXU call centers were situated in Bangalore, India; Krakow, Poland; and the Philippines.

Those overseas outposts are gone — replaced, Patterson says, by what TXU calls “near-shore operations.” These, he said, are “in Spanish-speaking regions, and they consistently provide us with cost-effective and high-quality service for our customers.”

The Brashers say they don’t care who answers the phone as long as they get correct and honest answers.

Visit Watchdog Nation HeadquartersDave Lieber's Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong

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Dave Lieber, The Watchdog columnist for The Fort Worth Star-Telegram, is the founder of Watchdog Nation. The new edition of his book, Dave Lieber’s Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong, is available in hardcover, as a CD audio book, ebook and hey, what else do you need. Visit our store. Now revised and expanded, the book won two national book awards in 2009 for social change. Twitter @DaveLieber


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