August 16, 2013 — A new report by Texas ROSE details how various fees charged by retail electric providers (REPs) negatively impact ratepayers, especially senior and low-income customers.
"The customers hit the hardest by fees are those who can least afford them," the report states. "Adding fees to the bills of low-income consumers increases the likelihood that the consumer will not be able to afford essential power."
When Texas deregulated most of its electric market, customers gained the ability to choose what entity bills them for the electricity they use. REPs sprang up in this open market, and they compete for business in most areas of the state. Texas ROSE examined the Oncor Service Area, which includes over 400 cities across 91 counties and 44 REPs.
Texas ROSE explains that various REP fees can make a big difference in what customers pay for electricity service. It encourages people to carefully study the terms and service agreements of REPs, instead of just looking at the price charged for electricity.
The report details many of the fees charged by REPs for routine transactions. Twenty-three of the 44 REPs charge a fee for paying a bill by credit card over the phone or online. While Oncor charges the REP $5 to connect/disconnect service, 40 of the 44 REPs charge an additional fee to customers that adds anywhere from $10 to $125 to the $5 charge.
Thirty-six of the 44 REPs impose "minimum usage" fees on customers if their electricity usage fails to reach a certain monthly level. The report notes that many elderly and low-income customers intentionally keep their electric usage low to save money. However, that practice can result in a fee ranging from $6.95 to $20. Charging the minimum usage fee "hits the pocketbooks of low-income, elderly and disabled people the hardest," concludes the report.
REP fees have real consequences for low-income customers who are already stretched thin. The report states that low-income families in Texas already spend 42 percent of household income on utility services, while the average energy burden for Texas households is under four percent. An analysis published by the Texas Coalition for Affordable Power in 2012 also found that REP electricity prices have been more expensive than other options since 2003 (see table below).
Texas ROSE believes the Public Utilities Commission or the legislature should prohibit REPs from charging fees, saying the current rules regarding disclosure aren't working. It also provides six recommendations for changes in disclosure rules, including outlawing minimum usage fees and requiring REPs to report total revenue (including that from fees) to the PUC.
The Texas ROSE report comes a few months after another analysis about retail markets. Consumer Affairs Consultant Barbara Alexander released a study in June about the impact of retail electric and natural gas markets on low-income customers. Her study focused on deregulated markets in Massachusetts, Illinois, Pennsylvania, and New York.
Source: Texas Coalition for Affordable Power
Sources: Texas ROSE, Texas Coalition for Affordable Power, Barbara Alexander, media reports