The maddening experience of shopping for electricity has spawned a group of concierge websites that say they find the lowest-price plans and move their customers when better deals appear.
But some retail electric providers are refusing to do business with the sites, and regulators have decided that’s OK — at least for now, despite concerns over fairness and competition.
The state’s Public Utility Commission approved new rules for electricity brokers last week, including a provision that lets energy retailers refuse to sell electricity plans to customers of the deal-finding sites.
The commission agreed with trade groups representing the biggest electricity sellers in Texas that a fundamental principle of competitive markets is that buyers and sellers come together willingly, according to the order. But PUC Chairman DeAnn Walker said during a commission meeting last week that the more she thought about it, the more concerned she became that power retailers were trying to shut out the concierge sites.
“It just doesn’t feel right to me,” Walker said. But she, along with the other two commissioners, opted to wait to see how the market shakes out before intervening.
POWER TO CONFUSE: Will the real Power to Choose stand up?
The Legislature last year approved a measure recommended by the PUC requiring electricity brokers to register with the commission and comply with consumer protection rules.
Concierge services act on behalf of consumers to buy power, typically charging a flat monthly or per kilowatt-hour fee to manage electricity purchases. Their computer programs cut through the confusing multitier plans, bill credits and debits, and free nights and weekend arrangements offered by retail electricity sellers, potentially saving shoppers hundreds of dollars a year.
But concierge services also are finding the low-margin plans offered on the state run-Power to Choose shopping website that some retailers offer to attract new customers in the competitive market. Retail providers offer the low-price options hoping that customers will stick with them when the plan expires — or that they’ll forget the plan expired and continue to pay a higher default rate.
Concierge service provider EZ Electricity has run into problems signing up customers on some plans offered on Power to Choose. Retail sellers identify EZ’s IP address and won’t let it complete the sign-ups, said President Mike Brasovan, who wouldn’t identify retailers who refuse to sell power.
Brasovan sees the practice as discriminatory.
“Everyone should be eligible for the publicly available deals,” he told the PUC.
For retail electric providers, it’s a legal issue: They don’t want to be accused of enrolling customers into plans without permission and shouldn’t be required to accept a broker’s claim that it has legal authority to enroll clients in power plans.
Forcing sales violates a free-market principal that buyers and sellers come together willingly, according to Alliance for Retail Markets, a group that represents the biggest sellers of electricity in Texas including NRG Energy, TXU Energy, Direct Energy and Calpine.
The Texas Energy Association for Marketers, a group of retail electricity providers that didn’t disclose its members in commission records, argued that retail electric sellers should be able to require that brokers get power-of-attorney agreements for each customer. The brokers say that’s a complicated and unnecessary obligation that insurance and real estate brokers aren’t required to meet.
Neither trade group returned calls for comment.
In the end, the commission said it will not tell retail electric providers how to determine if brokers have legal authority to act for their clients. The commission also will not require retail electricity providers to accept enrollments from electricity concierge companies, according to the order.
Concierge electricity brokers say it hasn’t been easy to go toe to toe against retail electric providers whose profit margins depend on consumers who don’t pay much attention to their electricity bills. The new service — when done well — gives households access to sophisticated electricity buyers who understand competitive power markets, said Jesson Bradshaw, CEO of concierge service Energy Ogre.
“It’s not like buying shoes,” he said.
Still, retail electric providers through their trade groups tried to use the opportunity of setting new broker registration rules to slow the growth of companies that help consumers find the cheapest power plans, he said. The fight illustrates what’s at stake for retail electric providers.
“There’s no question on profit pressure,” Bradshaw said.