The Watchdog: Electric bill may come as jolt

In the confusing and sometimes deceptive Texas residential electricity market, certain monthly charges called delivery fees are often more frustrating than a brownout.

Some electric companies list them in marketing materials and bills. Others don’t.

Delivery fees can add as much as 30 percent to a bill. But some electricity sales people only sell customers on the kilowatt-hour rate and leave out the delivery fee when closing the deal.

There’s only one place to learn the true kilowatt-hour charge, and The Watchdog will tell you where that is.

power consumption

Delivery fees cover the cost of moving electricity through power lines, a different cost than how much electricity is used each month. In North Texas, it’s the Oncor charge because Oncor Electric Delivery delivers the juice on behalf of dozens of retail companies that compete for business.

Delivery fees are a standard charge for everyone. Electric companies pass them through to customers.

Confusion abounds because of how the fees are presented. Companies can do it one of two ways. Companies can bundle the kwh rates and delivery fees into one lump sum, or they can split them out as line items.

How do you shop companies when some list their prices with fees and others don’t? Sticker shock hits later when monthly bills come in at a higher rate than what consumers were led to believe.

Another reason for confusion: The same fee has different names. Aside from Oncor charge, other names used are Transmission and Distribution Utilities recurring fees, TDU fees and TDU delivery charges.

Customer Justin Brower of Dallas said that when fees and taxes were added, his bill was 60 percent higher than he expected.

“It is extremely misleading to not show the customer which plans have the charges bundled vs. the ones which are unbundled,” he said.

One reason these monthly fees have moved front and center is because some of the larger retailers decided to break them out as a separate line item. It makes sense since the fees are outside the control of the electric companies that send the bills.

TXU Energy tells customers on its bills: “TDU delivery charges are regulated fees from your TDU for the delivery of electricity. Previously they were included in your energy rate, but are now itemized separately.”

The fees are set by state regulators. They’ve more than doubled since deregulation began in Texas a dozen years ago. Part of that increase covers smart meter conversions.

TXU provides an excellent breakout of the monthly fees at txu.com/tducharges. They include a 78-cent customer charge, a $2.19 smart meter charge and a $2.28 meter charge for a fixed monthly charge of $5.25. Seven other charges are based on the amount of kilowatt-hours used. All this adds a little more than 3 cents per kwh to a contract’s listed rate.

Champion Energy Services sends emails to current customers accurately advertising a renewal rate for its annual plan at 7.6 cents per kwh. Beneath in smaller print, it states, “Energy price does not include delivery fees. Average price per kwh is 11 cents.” That shows both the base cost and the transmission-added cost clearly.

“The problem,” says R.A. Dyer of Texas Coalition for Affordable Power, “is that a lot of retail electric providers are able to compete using confusion rather than price.”

A door-to-door electricity salesman will probably talk about a low kwh rate and not mention the delivery fees along with other taxes that increase a bill. That keeps an advertised kwh rate low, but it’s an incomplete statement of cost.

I promised to show the one place to learn the true price of an electricity contract. But it comes with a hedge.

By law, an electric company must list its full pricing with fees on the Electricity Facts Label for each offered plan. An EFL can be found on a company’s website and also on the state-run PowerToChoose.org.

Here’s my hedge, or really two of them. First, EFLs are confusing. An average kwh rate is shown and that includes the fees. But different companies present their numbers different ways. Some do it with text, others with numbers and text. There’s not enough standardization.

Randy Evans of Dallas told me he was certain he could shop smart by plugging company numbers from EFLs into a spreadsheet.

“Well, I was wrong,” he says. “Trying to make sure you were gleaning the correct information from these ‘Facts Labels’ was a chore indeed. Not all the numbers are necessarily there.”

That’s my second hedge. Some companies aren’t including the required information. A few ignore the requirement to put numbers in the EFL and instead give a website in the EFL offering further information.

Bottom line: Complete costs must be shown on an EFL. Check an EFL closely before agreeing to an electricity contract. Learn the “all in” rate with everything added up — kwh rate plus delivery charge.

Sounds like it should be easy to find out. But too often it’s not.

Follow Dave Lieber on Twitter at @Dave Lieber.
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The Watchdog: Smart thermostat contract’s huge termination fee shocks electric customer

Does it come as a surprise to hear that Texas electric companies have figured out a new way to make more money? Sure, the old ways still work. Ask Don Scoggins of Dallas, who diligently shopped for a lower electricity rate, found one he liked, but neglected to read the fine print. Guess the rest.

The bill came with a monthly $15 penalty because he used less than 1,000 kilowatts per hour. But that’s old-school money-grabbing, so 2009.

The 2013 way to puff up a monthly electricity bill is by adding monthly rental charges and penalties courtesy of the growing popularity of customer contracts for fancy-pants smart thermostats.

These are thermostats that are slickly designed, Wi-Fi enabled and operated with a smartphone, tablet or Web page. Supposedly, some thermostat models can learn the patterns of living habits of a home’s inhabitants and adjust temperatures accordingly.

Tamara Galbraith of Plano says she agreed to a two-year thermostat contract with her electric company, Tara Energy, a subsidiary of Just Energy. She regrets it entirely, especially after she switched companies and Tara charged her $495 for breaking the thermostat contract.

But it wasn’t entirely her fault. The hard sell was hard, promises were vague and the contract sent by Tara is, I promise you, unreadable.

‘Facts were squishy’

Call this the Great Thermostat War of 2013. Many Texas electricity retailers, including the giants, are using smart thermostats to promote energy conservation. But there are pitfalls to using them that customers need to know.

Foremost is what happened to Galbraith. She received a promotional phone call from Tara promising a SmartStat thermostat with free installation and a guarantee that it would pay for itself.

“Although the facts were squishy,” she says.

Among the promises: If she didn’t see at least 15 percent savings on her electricity bills, she wouldn’t have to pay the monthly $15 rental fee.

power consumption

“I asked many questions about how this worked, how the costs/savings were compared and was assured if I didn’t save money, I would pay nothing,” she says. “Very slick, but I feel like I still didn’t ask enough questions, obviously.”

Still, she signed the contract, the second with her electric company, the first being for electricity.

The company provided her with a one-page “Terms of Service,” which she didn’t read. In fairness, how could she? I needed a magnifying glass, and even then, the print is so tiny that individual letters could fit on a pinhead.

The Public Utility Commission of Texas has a wonderful rule about the font size of words on electricity contracts — 10 point or bigger — to avoid situations such as this. But since thermostat contracts are new, they aren’t covered in existing rules. Tara took advantage of the loophole. (Note to PUC: Please fix.)

Buried deep in the pinhead text, I found, thanks to my trusty magnifying glass, wording that states a customer such as Galbraith who switches to a different company must pay that $495 termination penalty.

Tara Energy officials did not make themselves available for an interview with The Watchdog. The company sent an email Friday stating that “with customer satisfaction at the heart of everything we do, we make every effort to address and resolve complaints and queries thoroughly and promptly.” Galbraith’s thermostat was installed. She paid $15 a month for six months. That’s high, a PUC spokesman told me. By comparison, TXU Energy charges $8 a month for one model. And, she says, she didn’t notice any additional savings, although she says it’s difficult to tell.

When her electricity contract expired last month, she jumped to another company with a lower rate. But that company wasn’t thermostat compatible (yes, one more problem to deal with), so she couldn’t use her SmartStat.

“I blame myself quite a bit for falling for it,” she says. “I admit I did not read the fine print and naively believed that ‘this will not cost you anything’ meant it from beginning to end. I did ask specifically if the service was transferrable and was assured that yes, it was.”

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In the fine print

Termination penalties (TXU charges $150 when someone opts out of its iThermostat contract) may not be the biggest issue for consumers who sign up for a smart thermostat.

Contracts for these shiny objects with color screens, vibrant colors and the lure of 21st century technology carry another notable clause.

Smart thermostat contracts specifically allow utilities to cycle a homeowner’s air conditioning system on and off during brownout periods on high-demand summer days. Although some electricity companies allow customers to opt out, the default position for contract holders appears to be that smart thermostat customers are going down for the count by their own consent.

I love saving the planet as much as the next person. But a customer who agrees to pay a monthly fee for a brainy thermostat also gives an electricity provider permission to use that thermostat’s Wi-Fi communication abilities to reduce electricity usage temporarily in a home.

What a deal.

If ever there was a set of contracts that consumers should force themselves to read before signing, it’s electricity agreements. That is, if the print is big enough to read.

Final note: Galbraith complained to the PUC and copied Tara Energy on the complaint. Immediately afterward, a Tara representative called her and promised to drop the entire termination fee.

Follow Dave Lieber on Twitter at @Dave Lieber.

Read the latest Watchdog Nation reports from Dave Lieber at The Dallas Morning News Watchdog page.

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