Texas Electricity, AEP Texas and the Rules of Deregulation – Part 3
November 29, 2011
If you’ve read Part 1 and Part 2 of my examination of AEP’s application to sell deregulated electricity in Texas you are acquainted with both the basics of the situation, as well as just how much confusion exists by consumers in the Texas marketplace. In this section, I’m going to pick back up on market confusion and competition, examine why AEP is insisting on operating under the AEP brand and talk about how the rest of the Texas electricity market views AEP’s application.
Brand Awareness, Competitive Advantages, and Market Confusion
Anyone who has ever taken a marketing class or just watched a healthy amount of television understands the importance of marketing and brand awareness. When viewed under that lens, it is easy to see why AEP wants to sell electricity service under the AEP brand name. In the same survey we referenced in Part 2, which was commissioned by AEP to support their REP application, it was revealed that 52% of all customers in the AEP Texas TDU service area expressed some form of brand recognition for AEP Retail Energy. To recap, AEP Retail Energy is the brand name AEP hopes to sell retail electricity under and for all intents and purposes is a company that does not even exist to retail customers in Texas. Yet 52% of people expressed recognition. Additionally, it had the second highest recognition of any REP brand currently operating in any AEP territory behind only West Texas Utilities (37% to 36%), the former AEP retail electricity branch which was sold to Direct Energy in 2002.
That is the power of branding. When a company that doesn’t even exist yet in Texas has 56% total state market awareness and is effectively tied for first as the most known brand in a company’s native service territory, it is easy to see why AEP is so intent on doing business as AEP Retail Energy. The AEP name brand gives them a huge competitive advantage.
If you don’t believe brand awareness is that big a deal, lets further shine a light on the competitive advantages and their importance in the Texas deregulated electricity marketplace. Here are some more telling facts from the survey results turned up by AEP.
So what does all this data tell us? It tells us that brand recognition is extremely important when competing for customers. It’s no coincidence that TXU and Reliant are far and away the largest two REPs in the state of Texas. The two companies combine to serve almost 45% of all deregulated electricity customers in Texas. Is it any wonder that AEP wants to also capitalize on their own pre-existing brand awareness? They want to be one of three companies fighting for that 45%, as opposed to one of the other 50 or so REP’s slugging it out for the other 55% percent of customers.
What Does Everyone Else Think?
Not surprisingly, not everyone is on board with the AEP license application. CPL (Central Power & Light), sold by AEP to Direct Energy in 2002, has filed an intervention in their petition protesting the move. We can assume Direct Energy is frustrated by the idea that AEP could resume business in the REP space. Much of the value they got when they purchased CPL and and WTU (West Texas Utilities) from AEP was in the familiar brand names to the people in those service areas. The same way Reliant and TXU have the name recognition and history of brand awareness that comes with being an incumbent. If AEP suddenly comes into those areas and sells electricity as anything with AEP in their name, it drastically devalues Direct Energy’s purchase. And customers in that area will likely be even more confused, as has already been illustrated.
Direct Energy is not alone in their protests. The Alliance for Retail Markets (ARM) and The Texas Energy Association of Marketers (TEAM) have also filed motions to intervene in protest of AEP’s application. ARM is a coalition of REPs that act together in some matters, including Gexa, Champion Energy, Green Mountain and more. TEAM is a similar group of deregulated market participants made up or other REPs with members that include Bounce Energy, Amigo and Tara Energy, StarTex Power, Cirro Energy and more. So basically, all of the other REPs in Texas are opposed to AEP’s application to sell deregulated electricity. They know that AEP will be have a distinct advantage because of established brand recognition. Additionally the PUC will also weigh in with their opinion in court, and my understanding is that they’re strongly against the idea of allowing AEP to do business as AEP Retail Energy. Whether that prevents them from doing business as some other name isn’t clear
This concludes my examination of the importance of brand awareness and the market confusion that still exists in the world of Texas electricity. In the last post in this series, I’ll offer my own opinions on AEP’s actions as well as some other concerns that aren’t being addressed in the hearings.
Texas Electricity Provider Map
September 30, 2011
Last week’s purchase of First Choice Power by Direct Energy was yet another major acquisition of a Retail Electricity Provider by a major energy conglomerate. There’s been around a half a dozen of these deals in the past year, and in my opinion things have gotten a bit muddled and confusing. So I wanted to write a post to chart exactly who owns who in the deregulated electricity space in Texas.
Dominion Resources: Dominion Energy probably isn’t a name that is very recognized by Texas electricity customers. However, they are a huge energy company that deals in both energy generation and distribution in multiple states. Headquartered in Richmond, Virginia, they own the incumbent and regulated electricity providers in Virginia and North Carolina. In Texas, they own Cirro Energy, which they purchased in 2008. Earlier this year, Cirro Energy purchased Simple Power and absorbed their customers.
NRG: NRG, a new Jersey based company, is another huge energy company with massive power generation resources. On top of energy generation plants, NRG also owns Green Mountain Energy, which they purchased in 2010 for 350 million dollars. In 2009, they purchased former incumbent Texas electricity provider Reliant Energy for 287 million and change when Reliant was under heavy financial distress. This was a steal considering Reliant was the second largest REP in the state at the time and has huge brand recognition. In turn, Reliant Energy owns (and I believe operates) Pennywise Power, which is a new brand they’ve put into the deregulated Texas electricity market to try and capture different customers without effecting their core brand. So NRG owns Green Mountain and Reliant, and Reliant in turn owns Pennywise Power.
Just Energy – Just Energy is yet another big energy company, with resources all over North America. They had been a fairly smaller player in the retail electricity market in Texas until recently. Just Energy itself was mostly a niche provider, offering 5 year long term contracts to customers. However, they recently purchased the entire retail arm of Fulcrum Power. That includes Amigo Energy, Tara Energy, and Smart Prepaid. So now all of those brands are part of the Just Energy portfolio. They’ll likely keep the branding and still do business under the names Tara and Amigo, but it’s all Just Energy. Just Energy also owns another smaller REP, Commerce Energy.
Direct Energy: Direct Energy is actually a subsidiary of a British company called Centrica, but they’re known almost exclusively in North America as Direct Energy, so that’s the name we’re going with. Direct Energy is yet another huge energy generation company with huge and varied resources. In the retail electricity space they do business as Direct Energy and they are one of the biggest REP’s in Texas. They also operate in Texas as WTU Energy and CPL Energy in two respective TDSPs. In the Spring, Direct Energy also purchased Gateway Energy Resources for 90 millions dollars. Since then, Direct has removed Gateway as a brand from doing business in Texas. Just last week, Direct Energy made another huge purchase, this time of First Choice Power for 270 million dollars. Which is a huge price tag. So, as of now, every company I mentioned above is really a subsidiary of Direct Energy.
Constellation Energy: Constellation Energy is the largest energy supplier in America. Their 2007 revenues were 21 billion dollars. So yes, they’re another big energy guy. They own the regulated electricity entity Baltimore Gas and Electric. In 2 month period last spring and summer, Constellation announced purchases of both StarTex Power as well as MX Energy, two retail electricity providers that operate in the Texas deregulated markets.
Gexa Energy: NextEra Energy is the parent company of Florida Power and Light, the regulated electricity provider for much of Florida. They’re another big energy company, having generation resources in over 20 states. In 2005, Florida Power & Light purchased Gexa Energy. They still do business in Texas under the name Gexa.
Dynowatt: Dynowatt is a subsidiary of Accent Energy, which is a large company with natural gas ties in Ohio. Accent also serves deregulated New York, but they do business in Texas as Dynowatt.
TXU Energy: TXU is actually a subsidiary of Energy Future Holdings, which also owns Luminant, the power generation portion of the old TXU company that was forced to split because of deregulation laws. Now Luminant and TXU operate separately. TXU is the largest individual REP in Texas and one of the two former incumbent providers.
The following Retail Electricity Providers are stand-alone entities:
Texpo Energy: Texpo Energy is a smaller company operating in Texas. What makes them interesting is that they actually operate under 3 different brand names while all sharing the same PUC Certificate. The other two brands are Southwest Power & Light and YEP. So to sum things up, Texpo, Southwest Power & Light, and YEP are all the same company operating in Texas under different names.
Hopefully this helps to give people a clearer picture about who some of the players are in Texas electricity. It is important that people know exactly who the company is that is supplying their electricity. For example, if someone had a bad experience with one company, they might not want to get service from another one of their subsidiaries. And since there’s been so many purchases and mergings of REP’s in the last 6 months, I thought it might be a good idea to chronicle which companies have ended where after the dust has settled. I’ll try to update this page moving forward as well. I doubt we’ve seen the last of big REP acquisitions, so this family tree might change.
I’ve included a crude flowchart below. Yes, I do realize it looks like it was put together by a 3rd grader.
Texas Electricity Ratings Update: New Rankings Released
September 27, 2011
Good afternoon, everyone. I just wanted to post a quick update that I’ve revised the Texas Electricity Ratings ranking of providers this week. The new rankings and numbers are posted, although there wasn’t much change in the actual order of providers.
Bounce Energy remained in the top spot, boosted by their great freshman performance in the JD Power Rankings that were released in August. They raised their average a few tenths of a point with that addition and by continuing to work to their strengths as an REP. So congratulations to Bounce Energy!
Champion Energy held onto the number 2 spot, although Gexa (leapfrogging Direct Energy) closed the gap after Champion was hit with some negative reviews by customers after August heat spikes wreaked havoc on their indexed plans. Direct Energy and StarTex power rounded out the top 5.
It was a tough summer for electricity providers in Texas. Lots of companies suffered losses because of the energy shortages. And because of some bad pricing scenarios with some variable and indexed plans, many providers have pulled their Month To Month plans from the market completely. By the same turn, lots of customers had bad summers as well, just because of bad circumstances and the worst summer in Texas recorded history. That being said, the wheels keep turning. Below is a full list of the provider rankings.
Texas Electricity Ratings rates providers in the marketplace based on a number of different factors, including pricing, PUC complaint statistics, Better Business Bureau evaluations, third party surveys, customer service and many other important categories.
The JD Power & Associates group has released their most recent survey of the deregulated electricity providers operating in Texas. In their own words:
The study, now in its fourth year, measures customer satisfaction with retail electric utility providers in Texas by examining four key factors (listed in order of importance): price; billing and payment; communications; and customer service.
You can view the full results here, but I’d like to run down some of my thoughts about the winners and other participants below.
First, congratulations to Champion Energy, who has now won the award for a 2nd straight year. Their presence and reputation in the market continues to be excellent, and this survey supports that. Their score was a 745/1000. Landing in the 2nd spot was Spark Energy, which is their highest showing yet in this survey, with a score of 740/1000. Rounding out the top 3 was StarTex Power, a mainstay in this yearly poll, with a score of 739/100. As an interesting factoid, all 3 of these retail electricity providers are headquartered in Houston, Texas. And I’m personally proud to say that all of the top 3 REPs are also partners with Texas Electricity Ratings.
Other Texas Electricity Ratings partners fared well on the survey. Amigo Energy, Direct Energy, and Dynowatt all scored 4 out of 5 in overall customer satisfaction, as did Green Mountain Energy and Gexa Energy. Bounce Energy also scored a 4 out of 5 in overall satisfaction, which is extremely impressive considering this is their first year on the survey.
The incumbent electricity providers, TXU and Reliant, did not fare well at all on the survey. TXU Energy was rated last of all providers surveyed, with 2 out of 5 for overall customer satisfaction. Reliant Energy scored 3 out of 5.
I would encourage everyone to read the full press release, and it’s certainly worth reading, but I’m pasting almost the entire thing in this post anyway. Some more interesting facts from the PR below, with my thoughts:
Overall satisfaction among residential customers of electric retailers in Texas has increased to 659 on a 1,000-point scale in 2011—up by 25 points from 2010 and 30 points from 2009. While satisfaction has improved in 2011 in all four factors examined in the study, satisfaction with price improves most notably to an average of 644, increasing by 34 points from 2010. During the past several years, customer-reported bill amounts have declined steadily from a median of $167 in 2009 to $156 in 2010 and $150 in 2011. These price decreases are primarily due to declining natural gas prices.
Well, this seems to contradict Recharge Texas’s hilariously off-base statements about Texans being dissatisfied with deregulated electricity, which I already broke down: here.
Satisfaction with the billing and payment factor has also improved considerably, up 31 points from 2010. Contributing to this increase is a shift in payment methods, with a higher proportion of customers choosing to pay their utility bill electronically rather than by mail. Approximately 46 percent of customers indicate paying their bill either through a financial institution or utility website, while 23 percent of customers mail their payments. Satisfaction among customers who use online and electronic payment methods (recurring bank or credit card debits) is considerably higher than among customers using traditional methods (mail, phone or in-person payment).
I personally think this is a huge deal. It illustrates perfectly the kind of innovation that has been forced onto the market by competition. Not only for online bill pay, but mobile applications and any other kind of innovation that has taken place in the past 9 years. Competition forces companies to stay at or ahead of the curve, if possible. Some regulated electricity providers in other states don’t even have online bill pay yet.
And some final snippets:
It pays to shop around before deciding on an electric retailer. Customers who consider more than one electric retailer are substantially more satisfied than those who only consider one retailer. It may be tempting to choose a retailer based solely on low prices, but this could result in being less satisfied. Customers who choose their retailer based on good customer service are notably more satisfied than those who make their decisions based on low price, reputation, past experience with a retailer or recommendations from family or friends. Select your payment plan carefully. Customers who opt for a fixed rate plan—which guarantees a set rate during the entire length of the contract—are much more satisfied than customers who choose a variable price plan. If you’re dissatisfied with your current electric retailer, consider switching. Among customers who rated their previous provider as “unacceptable” (one point on a 10-point scale) and switched to a new provider, satisfaction soars to an average of 747—nearly 90 points higher than the industry average.
Texas Electricity: Minimum Usage Charges
August 2, 2011
Earlier this week, I got an email from a Texas Electricity Ratings reader, suggesting I write an article about Minimum Usage charges. We’ve discussed Minimum Usage charges in the past here, but to clear things up, in short, they’re additional charges that are tacked onto a person’s bill if they use less than a certain amount of electricity per month.
The tricky part is that the charges and the thresholds for the charges are different for every REP (Retail Electricity Provider). Which is what the reader asked me about. I thought it was a great idea, and I should have thought of it myself a long time ago. So I ran through most of the major providers operating in Texas and researched to put together a list of the minimal usage charges for each provider, as best as I could find. So below is a guide to the minimal usage charges for Texas electricity.
Ambit Energy: $9.99 for less than 1000 kWh per month
Amigo Energy: Depending on the plan it is $9.95 of $6.95 for less than 1000 kWh per month
Bounce Energy: $4.95 for less than 1000 kWh per month for almost all of their plans, except intro plans are $6.96 per month for less than 1000 kWh.
Champion Energy: $4.95 for less than 500 kWh per month
Cirro Energy: $5.25 for less than 1000 kWh per month
Direct Energy: I couldn’t find a Monthly Fee in their Terms of Service or EFLs
Dynowatt: $6.95 for less than 1000 kWh per month
First Choice Power: $5 for less than 650 kWh per month, plus a $4.95 base charge
GEXA Energy: Seems to simply use a sliding rate per plan for different usage w/o a minimum charge
Green Mountain Energy: Didn’t seem to see any minimum usage charge in the EFL or Terms of Service
Mega Energy: $12.96 for less than 1000 kWh per month
MX Energy: Seems to simply use a sliding rate per plan for different usage w/o minimum charge
Reliant Energy: $9.95 for less than 800 kWh per month
Southwest Power & Light: I didn’t see minimum usage but they had a $7.95 monthly meter fee.
Spark Energy: $8.99 for less than 1000 kWh per month
StarTex Power: $4.99 for less than 500 kWh per month
Tara Energy: $6.95 for less than 500 kWh per month
Texas Power: $10.00 for less than 1000 kWh per month
TXU Energy: TXU uses a base $4.95 charge and sliding rates for less or greater than 1000 kWh, per plan.
Also, I’d like to point out a few other things about the list above. First off, just because I didn’t find a charge doesn’t mean there isn’t one…I just could have missed it looking through the documents. Additionally, all the EFLs I looked at were from plans in the Centerpoint service area. I looked at at least 2-3 plans for each provider to get an idea of consistent charges listed…I did NOT pour through every EFL from every single provider. This is simply to give people and idea of what to expect, and hopefully be helpful. Also, it’s important to note that for the guys that don’t have any minimal usage charge, chances are high they simply tacked it onto their sliding rate scale. But if you find a great price on a guy with no listed charges, then absolutely go for it.
One last note, Stream Energy’s EFL was…weird. Despite advertising their tiered pricing for rates on a 500, 1000, and 2000 kWh scale like everyone else in the market, the fine print of the EFL says their actual tiers are:
The Price is a tiered
pricing structure, based on the following tiers: i) up to 699 kWh depicted in the EFL as Average Monthly Usage of 500 kWh, ii) 700 to 1,499 kWh depicted in the EFL as Average Monthly Usage of 1,000 kWh, and iii) 1,500 to 2,499 kWh depicted in the EFL as Average Monthly Usage of 2,000 kW
So just keep in mind that you have to use a bit more electricity to get to their cheaper electricity rates.
Any questions?
Around the Texas Electricity Blogosphere: 6/29/2011
June 29, 2011
Good afternoon, everyone. I just wanted to highlight some of the things happening in the Texas electricity market, from marketplace news as well as news regarding electricity providers.
Bounce Energy – First off, Texas Electricity Ratings partner Bounce Energy has had an extremely busy and productive week. First, they launched their new iPhone application. It allows you to pay your bill, look at historical usage, and even includes tips on saving energy. You can get that app here. And even cooler, they’ve launched a new platform that will allow customers to order electricity without ever leaving Facebook. This is a pretty cool technology upgrade that fits right in the wheelhouse for the country’s “most ‘liked’ electricity company.”
Twin Eagle Resource Management – Awhile back, I wrote about Twin Eagle Resource Management, a new company entering the Texas deregulated electricity marketplace. Now it looks like that will not be happening because of some questionable behavior. Paul Ring at Energy Choice Matters has some more details, specifically:
According to the SEC, the investigation arose, “out of Respondent’s [Doty] role in Dynegy’s materially misleading use of a structured-finance transaction called Project Alpha (‘Alpha’).” The SEC said that, “Alpha was essentially a $300 million loan to Dynegy, disguised as cash from operations through the purchase and sale of natural gas,” that, “had no business purpose aside from minimizing Dynegy’s taxes and narrowing the gap between Dynegy’s net income and operating cash flow.”
Whoops. For some clarity, Doty refers to Robert Doty, the Executive Vice Present and CFO of Twin Eagle. It’s unclear what will come of Twin Eagle at this point.
Bill Assistance – Finally, here’s an article from awhile back that has a list of different charities that help out people in financial need with their electricity bills. Each charity has different requirements for assisting people with their Texas electricity bills, but for people feeling a financial pinch, it is probably worth exploring.
Around The Texas Electricity Blogosphere
June 21, 2011
Here are some interesting blog entries from Texas Electricity Ratings partners that I wanted to pass along.
Why Doesn’t Houston Bury Power Lines? – This article from Spark Energy discusses some of the reasons why we don’t see more communities burying power lines in Houston. Burying power lines is a common practice in other parts of the country, and would seem like common sense in a part of Texas that is prone to the occasional Hurricane. This article discusses some of the reason, and they’re not all related to the cost.
Bounce Energy – Bounce has written a number of blog posts lately focused on helping Texans during their moving process. The series includes an overview of the moving process, some pre-move tips, as well as post-move ideas and suggestions. It should come in handy for anyone moving this summer.
Direct Energy’s Disaster Supply Kit – And finally, Direct Energy indicates to you what should go in a Disaster Supply Kit. This is important, particularly for areas of Coastal Texas as hurricane season approaches. However last winter’s Ice Storms were a reminder to everyone that it is a good idea for anyone to have a disaster supply kit ready, regardless of whether you’re in a Hurricane zone or not.
Texas Electricity Ratings Update: Bounce Energy #1
May 31, 2011
With summer having arrived, I wanted to highlight the most recent update in the Texas Electricity Ratings rankings of providers. In the latest ratings calculation, we had a major shift in the top spot, with Bounce Energy sliding into the #1 spot, which been occupied by Champion Energy for almost a year. Bounce barely edged out Champion for the top spot for several reasons. The first was a commitment improving their customer service. They’ve cut their total number of PUC complaints in the half 6 months, making consistent strides to improve what before was an area of weakness. With that improvement factored in with their already superior rewards program, their competitive pricing, and their innovative approach to web usability was enough to propel them to the top spot. Congratulations to Bounce Energy.
Champion slides back into the second position. And the top 5 is rounded out by TER newcomer Direct Energy, Gexa Energy, and StarTex Power. Direct Energy is the largest retail energy provider in North America, and StarTex Power was recently purchased by Constellation Energy. For a complete look at the Texas Electricity Ratings top ten, visit our homepage and scroll down to the rankings list.
Market Rates: Abilene Electricity & AEP North 5/26
May 26, 2011
Good afternoon, everyone. Our shopping guide entry today for Texas Electricity focuses on the North Texas region, which is serviced by the AEP North TDSP. This includes the prices for Abilene electricity and San Angelo electricity. Compared to Houston and Dallas, the electricity rates in this region are much more expensive for month to month electricity plans, but their long term fixed rate plans are actually reasonable and affordable. And while I’m almost always a proponent of locking in low electricity rates, it makes even more sense in areas like North Texas where volatile month to month rates are already priced at a high premium. The list below also includes both month to month electricity plans along with long term fixed electricity plans. It’s a good place for Texans to start their shopping process.
Month to Month Electricity Plans:
Month to Month Green Electricity Plans:
Long Term Fixed Rate Electricity Plans:
Long Term Fixed Rate Green Electricity Plans:
Cities covered in this shopping guide: Abilene electricity; Alpine electricity; San Angelo electricity; Vernon electricity.
Good morning, everyone. This mornings entry into our weekly series of Texas electricity shopping guide entries is for South Texas, which is the AEP Central service area. AEP Central’s service area includes Corpus Christi electricity and Brownsville electricity. This is the most expensive area of Texas for electricity rates, so it’s important to understand where the market starts when shopping for new electricity plans. The list below is of the most commonly ordered types of electricity plans with the cheapest electric rates. It should help anyone shopping for new electricity providers save money and keep their summer electricity bill low.
Month to Month Electricity Plans:
Month to Month Green Electricity Plans:
Long Term Fixed Rate Electricity Plans:
Long Term Fixed Rate Green Electricity Plans:
Cities covered in this shopping guide: Brownsville electricity, Corpus Christi electricity, Harlingen electricity, Laredo electricity, McAllen electricity, San Benito electricity, Victoria electricity.
Texas Electricity Ratings: The Blog 