Jun 16 - McClatchy-Tribune Regional News - R.A. Dyer Fort Worth Star-Telegram, Texas

Prices aren't the only thing skyrocketing in the state's deregulated electricity market.

Amid continuing company failures -- and the resulting forced transfer of tens of thousands of ratepayers to default electric companies -- Texans in growing numbers are griping about their ill treatment by power companies.

According to the Texas Public Utility Commission, complaints related to the electric market jumped from 704 in January to 1,123 in May. Complaints against three of the four recently failed electric companies jumped about 2,400 percent, from about 20 at the beginning of the year to 508 in May.

E-mails and phone calls also continue streaming into the Star-Telegram. Frustrated consumers tell stories of poor treatment by their regular electric competitors, confusing PUC rules, uninformed marketers and the near impossibility of obtaining reliable information about the financial status of companies seeking their business.

One company has collected payments from customers but not delivered any electricity, according to some complaints.

Another customer said that he was the victim of identity theft and that law enforcement officials suspect an employee of his now-defunct electric company.

He said other customers may have been similarly victimized.

"The bargain I was supposed to be getting turned into a rip-off," said North Texas resident John Hayes, a former customer of one of the recently failed power companies.

"This system is not working," said Steve Massey, a municipal official in Allen who was dumped not once but twice by failed companies.

'System is defective'

Carol Bierdrzycki, director of the Texas Ratepayers' Organization to Save Energy, says it's time to declare the electric market a bona fide disaster. The consumer advocate urges the Texas Legislature to make dramatic changes.

"This whole system is defective," she said.

Among consumer groups and even some industry representatives, complaints abound about the recent market upheavals:

In recent weeks, more than 35,000 customers have been dumped involuntarily, often to high-cost alternative power companies, because of the financial failures of their regular providers. At least 15,000 of those customers live around Fort Worth and Dallas.

Many customers dumped to default companies could see their bills increase by 100 percent or more, according to calculations from PUC figures. Many customers also face extra charges for "out-of-cycle" meter reads if they wish to get better rates by quickly switching from the default service.

Behind the scenes, electric wholesale prices have spiked to the highest levels in memory. And the commodity price of natural gas, which fuels many electric plants, has reached levels not seen since the devastating hurricanes of 2005 disrupted production in the Gulf of Mexico.

Both trends may be contributing to the electric company failures and putting upward pressure on home rates.

"We need to ease the current situation as soon as possible," Barry Smitherman, Public Utility Commission chairman, said recently.

In response, the three-member panel has called two emergency meetings and directed the operator of the Texas power grid to make swift changes to its technical systems.

Smitherman and the other PUC commissioners have also said the market will get a boost from an ambitious overhaul under way at the Electric Reliability Council of Texas, which operates the grid. That overhaul is scheduled for completion next year.

But it also remains months behind schedule and hundreds of millions of dollars over budget

'In financial risk'

In the last several weeks, Bridgeport-based PreBuy Electric, Houston-based National Power Co., Denton-based Hwy 3 MHP and Houston-based Riverway Electric failed to meet their financial obligations to the Texas power grid or indicated that they could not do so.

As a consequence, most of their customers were switched to the default "provider of last resort" (POLR) companies, which charge rates linked directly to volatile spot prices on the wholesale energy market.

PUC officials have urged customers dumped to the last resort service to immediately shop around for better deals.

But many customers tell the Star-Telegram that they have been told by electric retailers that they cannot get off the default service for several weeks -- not until they get their meter read -- and that an out-of-cycle meter read costs extra.

"I have contacted several providers and I am told I must stay on the [default] rate until next month, when my meter is read," wrote Hayes, a former customer of National Power.

"This places me in financial risk because my bill may triple and I have no way to change to a discount provider until the meter situation is handled."

Hayes said he has excellent credit, yet still risks getting charged some of the highest rates in the state during the hottest months of the year.

Other POLR customers who have paid for their regular service in advance -- customers of the defunct PreBuy Electric, which billed ratepayers before usage -- could find themselves with another problem -- double payments -- because the POLR won't recognize the prior payments.

Many who get dumped to the POLR also will get stuck paying new deposits.

Mike Renfro, the PUC's director of customer protection, acknowledged that it's a frustrating situation.

"A lady called and said her last bill to National Power was $390, and she didn't have another $350 for the deposit -- I said, 'You've got to pay the deposit, or they'll turn the lights off,' " he said.

State lawmakers and Texas regulators created rules for POLR companies as a way to ensure continuity of service for customers whose regular electric company goes belly-up in the newly deregulated electric market.

Industry representatives say that because of the inherent uncertainty of operating providers of last resort -- which can never know how many customers they need to serve in any given month, for instance -- rates need to remain high to cover fluctuations in the volatile wholesale market.

But consumer groups say the rules should be rewritten.

"This needs a substantial overhaul -- instead of being a penalty for customers, it should be truly a safety net that customers can count on when their companies skip town," said Tim Morstad, a policy analyst for AARP.

PUC spokesman Terry Hadley said agency staff signaled Friday that they will begin considering changes to the POLR rules.

He also said that the agency has taken steps to get refunds for some customers caught up in the POLR mess and that the PUC could end up assessing fines against defunct electric companies.

If you get switched

The PUC advises customers switched to provider-of-last-resort service to quickly shop around for a better deal. Even before receiving a notice from the new provider, customers can shop around at www.powertochoose.org or 866-PWR-4-TEX (866-797-4839).

To accelerate a switch, customers can also pay extra for an out-of-cycle meter read. For more information, call the PUC at 888-782-8477.

Industry representatives say customers who get switched to POLR service and do not respond to letters demanding payments of new deposits could end up having their electricity cut off after nine days.

What's next?

The Electric Reliability Council of Texas, a quasigovernmental organization that operates the Texas power grid, is expected to consider technical changes during its meeting Tuesday. Officials hope to tamp down dramatic price spikes for wholesale electricity.

ERCOT technicians are working on a technical overhaul of the electric market that is scheduled for completion next year. The now-$300 million-plus project is over budget and behind schedule.

The PUC indicated Friday that it will consider possible changes to rules that govern POLR service. The PUC usually takes a few months to make rules.

The PUC is expected to decide a case in July that could lead to the construction of $4 billion to $8 billion in new transmission lines. The impact on individual bills remains unclear.

Oncor, the company that provides electric transmission services in North Texas, wants to assess a new monthly surcharge of $2.29 to cover the cost of advanced meters. The PUC will likely rule on the request within several months.