Electricity brokers will likely face regulatory oversight like other power dealers

Houston Chronicle

L.M. Sixel March 28, 2019 Updated: March 28, 2019 8:21 a.m.

The Public Utility Commission asked the Texas Legislature earlier this year to expand the agency's oversight to include electricity brokers, companies that represent consumers and businesses shopping for power plans. Brokers, including on-line websites that sell residential power plans, are compensated by power companies for generating business but are not currently subject to consumer protection rules.

A bill filed by Democrat Sen. Judith Zaffirini of Laredo to require brokers to register with the commission and comply with consumer protection rules cleared the Business and Commerce Committee this week and was recommended for the local and uncontested calendar, the place where local issues and non-controversial bills are typically approved, according to legislative records.  A companion bill was filed by Republican Rep. Tan Parker of Flower Mound in the Texas House.

As it currently stands, if an unregistered broker violates the commission's customer protection rules, businesses and consumers have no recourse, according to an analysis of the bill on the state legislative site. That would include complaints of misleading consumers, misrepresenting pricing and operating websites deceptively similar to reputable websites.

The Houston-based Energy Professionals Association which represents electricity brokers in 14 states with competitive electricity markets is in favor of the bill, said director Shannon McGriff.

So is Houston-based Choice Energy Management which negotiates electricity contracts on behalf of business clients.

"Currently anyone can claim to be a broker of electricity, with no education on the matter, no control mechanism or ethics oversight," said managing partner Kiki Dikmen. It essentially opens the door for criminals to be a part of this fraternity, he added, and as a result, the entire community gets a bad reputation.


Texas legislator wants to kill Power to Choose website

Houston Chronicle, By L.M. Sixel

Updated10:31 am CST, Friday, February 8, 2019

A state-sponsored website millions of Texans use to shop for electricity could be on the chopping block.

Texas Rep. Jared Patterson, a freshman Republican who represents Denton County, wants the Public Utility Commission to drop Power to Choose, the website introduced two decades ago when Texas deregulated the electricity industry. Patterson has introduced a bill in the state legislature that would eliminate the website that compares dozens of electricity plans, arguing that the  government shouldn't be competing with private businesses.

"Government doesn't offer pricing comparison sites for groceries or car tires, and shouldn't for electricity rates either," said Patterson.

Patterson is director of energy services at Rapid Power Management, a retail electric brokerage firm based in Carrollton that buys electricity on behalf of manufacturers and commercial clients.

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Regulators approve power market change expected to raise costs

By Erin Douglas, Houston Chronicle, Updated 6:53 am CST, Friday, January 18, 2019

Texas regulators approved a proposal to change the way wholesale electricity markets work in Texas, a move expected to significantly boost revenues for power generators while increasing electricity prices for consumers and businesses.

The state’s power companies have long pressed regulators for relief from a competitive market that in recent years has paid low prices and hurt their profits. The companies have argued that without changes that increase prices, they won’t have incentives to invest in new power plants as electricity demand grows and potential shortages loom.

consumers and businesses.

The state’s power companies have long pressed regulators for relief from a competitive market that in recent years has paid low prices and hurt their profits. The companies have argued that without changes that increase prices, they won’t have incentives to invest in new power plants as electricity demand grows and potential shortages loom.

The Public Utility Commission of Texas on Thursday approved a change to a market mechanism known as the operating reserve demand curve, which pays higher prices to power companies by increasing the wholesale price of electricity when demand increases and reserves run low. The commission estimated that the change would increase wholesale power costs by nearly $80 million over two years, assuming that new power plants come online to boost supplies, old plants stay online for longer than they would have otherwise and people react to higher prices by cutting their consumption.

A spokesman for the commission said regulators could not estimate how much more consumers might pay.

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Court fight shows breaking up hard to do for NRG, electricity sales firm

By L.M. Sixel

Updated 11:48 pm CDT, Wednesday, August 22, 2018 Houston Chronicle

For about 15 years, the Houston sales company 7 Point Group sold electricity door-to-door, at grocery stores and during special events on behalf of NRG, the largest electricity seller in Texas, with brands such as Reliant Energy, Green Mountain Energy and Pennywise Power.

Business was so good that this spring NRG and 7 Point executives sat down over a steak dinner to talk about growth strategies, recalled 7 Point’s president, Marco A. Romero III. But just a couple of weeks later, the long relationship came to a crashing end with a late night phone call from NRG telling Romero that he and his company were fired.

“It made no sense,” said Romero, who estimates his 300 or so agents were responsible about 70 percent of NRG’s outside sales.

Now, the one-time business partners are in the middle of a nasty breakup, fighting in court over non-compete agreements and whether 7 Point used confidential NRG information to sell electricity for rival companies. For the moment, 7 Point has essentially shut down after a state district court in Harris County ordered the company to temporarily stop selling electricity in Harris County and most places in Texas. The 7 Point Group has appealed that ruling.

The legal dispute, now before the state’s Fourteenth Court of Appeals, will likely drag on for months, but it opens another window on Texas’ deregulated power markets and the fierce competition among electricity retailers to sign up customers. As with other mature markets, such as credit cards and cell phones, the way to grow is to poach customers from competitors, prompting aggressive tactics to lure those customers away.

In Texas, most of the selling of electricity plans is done by marketing companies hired by power providers. The marketing firms use armies of sales agents to pitch plans at grocery stores, sporting events or door-to-door. Good sales people can make six-figure incomes, industry officials say.

NRG paid 7 Point as much as $325 in commissions for each new customer, according to court records. The 7 Point Group has several contracts with NRG, including one signed four years ago to sell electricity plans door-to-door in Texas and others to pitch NRG plans at retail stores and community events, according to court documents.

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How Texas power grid weathered blazing heat, record electricity demand

Houston Chronicle

L.M. Sixel Aug. 2, 2018 Updated: Aug. 2, 2018 12:05 p.m.

This summer was supposed to be brutal with days of triple-digit temperatures, less generating capacity and predictions the power grid couldn’t support the state’s electricity needs. Some of the dire warnings were spot on, as Texas broke records for heat and electricity use during the heat wave last month.

But regulators didn’t call for consumers to cut back. The lights stayed on. And wholesale prices didn’t spike as high as some feared.

Power experts figure it will take months for state regulators to report on whether there was any behind the scenes drama during the hour-by-hour power surges during the July heat wave that pushed temperatures in Houston above 100 degrees. At the moment, though, the state’s grid manager, the Electric Reliability Council of Texas, credits careful planning for weathering conditions that tested grid reliability in Texas.

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It pays to switch power plans, but few Houstonians do

By L.M. Sixel, Houston Chronicle

July 3, 2018 Updated: July 6, 2018 7:42am

Texas consumers can save hundreds of dollars each year by shopping for electricity, but most don’t seek out better deals, overwhelmed by the number and complexity of power plans on the state’s Power to Choose website, wary of fine print in too-good-to-be true offers, or just too busy to spend time calculating whether free nights and weekends offset the higher rates they pay during the week.

In the Houston area, only 16 percent of CenterPoint Energy’s 2.4 million residential customers — or about one in six — switched their electricity providers over the past year, according to the state’s grid manager, the Electric Reliability Council of Texas. Among the 3.5 million customers of the state’s largest electric distribution utility, Oncor of Dallas, just 13 percent — only one in eight — signed up with a new retail power company in the last 12 months.

Ultimately, analysts said, this means that the vast majority of customers are not reaping the benefits of electricity deregulation, which promised that more competition would mean healthy savings. One analyst estimates that consumers are leaving about $2 billion a year on the table, which is likely flowing to the bottom lines of retail electricity companies.

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