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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Comments

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