How much trouble can one Texas electricity company get into?
If you're super-huge Direct Energy, the answer is a jolt.
Every few years, the mammoth British-owned company pays a steep fine to Texas regulators.
Yeah, Direct Energy, The Watchdog keeps track of your sorry record. You and your companies are about to earn your 11th fine since the market was deregulated.
These violation fines are handed down by the (Public) Utility Commission. Parentheses around "Public" because I gave up on the idea that the PUC actually cares about us, the public. It's the Utilities Commission.
So many marketplace manipulators sell electricity in Texas. Yet state enforcement against these deceptive trade practices could be much stronger. Getting fined is a chore. Companies must engage in unethical conduct so widespread and obvious that wrongdoing can't be ignored.
That's what makes Direct Energy special.
Direct Energy and three other companies it owns — First Choice Power, CPL Energy and Bounce Energy — have been party to 11 different settlements in the last 13 years for a total of $1.8 million in penalties.
How does this stack up against other companies? The UC doesn't keep a public list of top violators. Direct Energy, commission spokesman Terry Hadley says, is one of the largest companies with more customers, thus more likely to be subject to many complaints.
Direct Energy fines
Just a sampling:
Direct Energy paid a $200,000 fine in 2009 because it was unable to bill customers for months at a time.
Two years before, Direct Energy paid a $695,000 penalty for improper renewal of commercial customers.
The company paid a $220,000 penalty in 2015 for improperly shutting off service to 250 families.
Now the company faces it latest trouble: a $70,000 fine for multiple violations committed by shady door-to-door sales people. Never buy electricity from door-knockers! This is why.
The Utilities Commission is charging $2,400 per violation based on 29 complaints. Direct Energy's sales staffers didn't properly identify themselves, enrolled customers without permission and did not provide required information.
Direct Energy spokeswoman Jessica Mahaffey says the company has "worked constructively with commission staff to resolve issues." A final vote on the fine by the UC is scheduled for Thursday. Approval is expected.
"If we make a mistake," she says, "we do everything we can to make things right for the customer."
She adds, "We believe the Texas competitive electricity market is working well, and consumers are benefiting with many competitive options along with robust protections."
Direct Energy wrote the UC last year asking them to shut down the state-sponsored shopping site managed by the UC, PowerToChoose.org.
"The market no longer requires this tool to support the transition from regulations to competition," the company wrote regulators.
That's a disgraceful request, but consider the source.
The site was not shut down, but Texans are clamoring for its improvement. Shopping for electricity is too complicated, and many Texans pay more than they should.
It's lonely complaining about electricity. The UC and state lawmakers act like deregulated retail electricity in Texas works almost perfectly because prices are lower. The Watchdog hears otherwise. Let me share what some of you have sent to me about the newest ways marketplace manipulators like Direct Energy game the system.
Nancy Barnes of Dallas filtered out of her search on PowerToChoose.org plans with monthly minimums. But companies created new wording to bypass the filter — base charge, charge per billing cycle and monthly service fee. That's a new way to game the system.
Donald McElfresh of Dallas discovered what I call the need for an "apples to apples comparison." His previous company lumped the electricity charge and the Oncor transmission charge together into one price. His new company lists them separately. When shopping, it's hard to compare.
Robert Scott of Highland Park identified another major flaw on PowerToChoose.org. Companies are showing a low price for anyone using exactly 2,000 kWh (kilowatts per hour) a month, which lands them atop search results. But if you dare to use 2,001 kWh or more, you pay higher prices. That's deceptive, and a lot of them are doing it. Scott also found that companies offering initial cash rebates usually end up burdening customers with higher rates.
Electric companies "manipulate the website to their advantage," he says.
David Smades of Dallas found the same problem. "I'd describe it as a bait and switch," he says.
Daniel M. Greenberg of Dallas says, "If a customer only reads the top line, it is a fantastic deal, but a sham when you consider the consequences."
Mark Trimarchi of Colleyville found a company that doesn't list the added Oncor charge anywhere as part of its rates in PowerToChoose.org searches. Because of this false price offer, the company rises to the top of search results for cheaper pricing.
Small improvements last year
After The Watchdog complained last year about marketplace manipulators gaming the system, the UC actually made improvements to the website.
But not enough to earn back the P for Public. Obviously, there's more to do. But I don't believe the UC is handling this. We suffer.
How to save money
If you're looking to save money in your household, the electric bill is the first place to start.
Are you overpaying?
Read my basic how-to-shop column (the most popular Watchdog column ever) by doing a search for the headline in quotes "Watchdog: Here's the best way to pick an electricity company in Texas." If you can't find it, send me an email (email@example.com) for the story link.
For starters, when does your contract expire? How much is your rate? Are you paying too much?
Staff writer Marina Trahan Martinez contributed to this report.
Direct Energy pays penalties
Direct Energy and its three sister companies pay a lot of penalties: $1.8 million going back to 2004.
$695,000 in 2007 for improper renewal of commercial customers
$200,000 in 2009 for massive billing failures
$28,000 in 2013 for improper enrollments
$220,000 in 2015 for improper disconnects
$70,000 in 2017 for door-to-door sales complaints
FIRST CHOICE POWER
$15,360 in 2004 for failure to respond to complaints
$500,000 in 2008 for contract termination problems
$16,500 in 2010 for failure to follow rules
$25,000 in 2013 for switching customers without permission
$18,000 in 2011 for a failed compliance audit
$28,000 in 2010 for a failed compliance audit
The Watchdog's Electricity Plan
1. Compare apples to apples. Force every company to list offered rates with the Oncor distribution charge included.
2. Ban deceptive language. Don't let confusing teaser rates and technical language disguise the real cost of service. Regulate those tricky and often-lying door-to-door sales reps.
3. End minimum-usage deals and monthly charges. Forcing people to pay more if they use less power doesn't encourage conservation.
4. Warn copycat sites. Demand that companies that deceptively use "power to choose" language on their websites indicate they are not state-affiliated.
ABOUT THIS COLUMN
The Watchdog Desk works for you to shine light on questionable practices in business and government. We welcome your story ideas and tips.
Contact The Watchdog
Write: Dave Lieber, P.O. Box 655237, Dallas, TX 75265