Consumers ask Texas PUC to Investigate Pre-paid Electricity Service

May 19th, Austin Texas – A Texas consumer group filed a petition today asking the Public Utility Commission (PUC) to investigate Direct Energy’s business practices in its Power-to-Go prepaid electricity product.  The petition was filed by Texas Ratepayers’ Organization to Save Energy (Texas ROSE) with a statement from a former employee concerned about the disconnection process and the health and wellbeing of the low-income and minority families who are given little choice except to take the Power-to-Go option.

In December of last year Carol Biedrzycki, executive director of Texas ROSE, issued a report examining the features of prepaid service plans and concluded that there is no evidence that the plans are in the best interests of residential and low-income consumers.  She was contacted by David Korn, a former employee of Direct Energy’s customer service contractor, APAC Customer Services, in February.  After reviewing the documents on file at the Public Utility Commission he contacted Biedrzycki because Texas ROSE was the only party to the rulemaking that seemed to understand the problems prepaid service in Texas poses to financially struggling consumers.

Korn worked with Biedrzycki over the last few months to document for the PUC the need for a closer look at the product.  Texas Legal Services Center, State Representative Sylvester Turner, Public Citizen Texas and National Consumer Law Center have signed on in support of the petition.  Biedrzycki is aware that the PUC has no obligation to act on the Petition.  She concludes, “the PUC is the only place to go to get the facts about how the commission’s prepaid service rules play out in the real world.  This was a worthwhile effort because doing nothing means we will never get to the truth about prepaid service.”

Prepaid electricity service is a controversial product in the consumer world.  Prices are high, it’s complicated to track how much money you need to keep the power on, and under newer rules it is easier for a company to disconnect a customer’s service.  There is no limit to the number of times a customer can be disconnected.  If the demand for payment comes between paychecks the customer has no option except to be without service.  Korn, who provides a lengthy affidavit for the petition, affirms that the marketing of the product targets low-income and minority households, presents an inaccurate description of how the service works, and fails to disclose the higher likelihood of being disconnected.  “In my short time at APAC, I regularly spoke to customers who needed help because they were confused about how their service worked, electronic disconnection notices were not always being delivered and families, many with young children, were often left without electricity for long periods of time.”

Randall Chapman, executive director of Texas Legal Services Center, says he read the petition and “was overwhelmed by the need to assure that notice and disconnection practices are complying with the law and that low-income and minority customers are not being targeted by a substandard service package.”

Representative Sylvester Turner has been outspoken about his concerns that prepaid service is a negative consequence of the deregulated electricity market that gives people lower quality and higher priced service with a lower level of protection from disconnection.  Turner states, “The commission needs to follow through with an investigation, levy fines where there are violations of the law and stop any business practices that are not in the best interests of low-income consumers.”

Public Citizen Texas shares the concern that prepaid service is creating a second class of electricity consumers and that the PUC needs to take a hard look at what is happening to Power-to-Go customers.  Tom “Smitty” Smith, executive director says, “having a deregulated electricity market was supposed to benefit consumers. We need to get to the bottom of this and make it right.”

The National Consumer Law Center has conducted research and issued reports on prepaid service in many jurisdictions citing the negative price and service impacts prepaid electricity has on low-income households.  See “Rethinking Prepaid Utility Service: Customers at Risk” at https://www.nclc.org/issues/prepaid-utility-service.html