Nov 19 - McClatchy-Tribune Business News Formerly Knight Ridder/Tribune Business News - Tom Fowler Houston Chronicle

Karen Green expected some changes when she and her husband moved from Mississippi to Houston last February, but she wasn't prepared for a near-tripling of her electric bill.

Granted, her new house was twice the size of the old one, but that didn't seem to justify the bills that nearly reached $500 this summer.

Once she realized Texas was one of the few parts of the country with a deregulated retail power market, Green exercised her power to choose, dropping Reliant Energy for one of the many other retailers offering competitive prices in her neighborhood.

Her rates went down significantly, nearly 20 percent, she said, but the customer service experience has been less than stellar.

"If I had to deal with their customer service on a regular basis, I would change again," Green said of her new provider. "But the price is better."

Green is just one of the 1.8 million Texans who have switched from the incumbent power provider in their region since Texas opened its retail electric markets to competition in 2002, according to Texas' Public Utility Commission. That's equal to 34 percent of all customers who have a choice.

Another 844,000 customers, or 16 percent, are still with the incumbent, such as Reliant in the Houston area and TXU Energy in Dallas, but on alternative plans.

That means 2.7 million continue to pay the default rate offered in their area, which is usually the highest, by choice, ignorance or inertia.

"Choice requires a customer to take action in ways they didn't need to under regulation," said Steve Davis, president of the Alliance of Retail Marketers, an advocacy group formed by seven independent power retailers in Texas. "Getting someone to take the first step and look into switching is the hardest part. But there are rewards if action is taken."

Customers will likely see even more choices in the coming months as the last vestiges of regulation -- the so-called "price-to-beat" rate that nearly 50 percent of all customers are still on and competitors use as a benchmark to set their rates -- goes away on. The stream of print, radio and television ads is expected to rise into the new year, power retailers say.

'A lot more shopping'

The level of customer switching has picked up significantly in the last six months, said Bobby Bragg, senior vice president of sales and business development for Whitefence, a Houston company that owns the power shopping site www.ElectricityTexas.com.

"There's certainly a lot more shopping going on since the higher prices we saw this summer," Bragg said.

Companies are trying to give consumers even more reason to switch -- or not to switch for current customers -- unfurling new pricing plans and advertising campaigns throughout the state.

"You'll see us being aggressive throughout the rest of the year and well into next year," TXU spokeswoman Sophia Stoller said. "Not only are we trying to hold on to all our customers in North Texas, but we want to take away all of Reliant's customers."

Reliant has been trying to move many of its price-to-beat customers to other plans, particularly the 2007 Secure Plan that locks in a rate that is 6 percent below the price to beat for the next year.

"Price is certainly one element of what customers are looking for, but so is price certainty," said Glen Stancil, vice president of residential marketing for Reliant.

Reliant said it will likely have new offers in the coming months and has even launched a new 100 percent wind-power plan that it is only promoting via its Web site.

Gexa Energy has also offered new plans recently, including a 12.9 cents per kilowatt-hour plan in the Houston area it calls the "Best in Texas," but its marketing efforts have been low-key, so far mainly using direct mail.

To switch or not to switch?

Whether it makes sense for customers to switch plans depends upon their current plans and what they hope to achieve with their new plans.

Customers still on the former monopoly companies' price-to-beat plans can easily find several that will cost less. In Houston, for example, there are dozens that offer savings of more than 10 percent off the price to beat. Some, such as the plans offered by Spark Energy and Amigo Energy, claim to offer 26 percent savings over a six-month and four-month contract, respectively.

Competing plans may only be separated by a penny or two per kilowatt-hour, but that can make a big difference over a year. Saving 1 cent per kilowatt-hour in a house that uses 1,000 kilowatt-hours each month can equal $120 per year.

Customers may also opt for plans that give them a longer-term guarantee by locking in a rate for a year or more. Two-year plans like those offered by Stream Energy, StarTex and TXU, as well as the one-year plans offered by Reliant and others, are designed to assure customers that they won't see the spikes they did this summer.

It's possible a customer could lock into a long-term plan only to see rates fall even further, but it's particularly difficult to predict where retail rates will go from year to year.

There are any number of reasons customers don't switch. For some, the choices may seem overwhelming: There are dozens of companies and plans to choose from, many with hidden fees and other caveats that make them difficult to compare.

Vada Russell, a recent retiree on a balanced-billing plan with Reliant, said she has held off switching because she will have to match the difference between her monthly payment under a balanced-bill plan and the sum she owes due to this year's price spike. That figure could reach $700, she said.

"I need several months of low bills so I can catch up. Then I'll look around," Russell said.

Others may not even be aware of how competition works, or that they even have choices. Consumer advocates say that's due in part to a big cut in consumer education funding beginning in 2004 ordered by the Legislature.

Still, some have switched more than once, like Tom King of Katy.

A couple of years ago, King and his wife switched from Reliant to Entergy at a rate of about 9 cents per kilowatt-hour. Entergy then sold its retail customer base in the deregulated parts of Texas to another firm when the rates were about 11 cents per kilowatt-hour.

When those rates went even higher, King switched to Spark Energy, which offered him a rate of 12.9 cents per kilowatt-hour, or 13.24 cents when other costs were included.

"The only drawback is they don't send you a bill in the mail. You have to pay it online either by debit or credit card, but I do get to accumulate some points on my Discover Card," King said.

Lee Ray of northwest Houston also did some shopping around when the bills for his 2,300-square-foot house jumped from $275 last summer to $350 this summer.

At first Ray and his wife considered going with TXU because it was a big company whose name they recognized, but they felt TXU's rates weren't much lower than Reliant's price to beat.

Eventually they decided on a six-month trial with StarTexas Power, which is offering a 12.1 cents per kilowatt-hour price.

tom.fowler@chron.com