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AEP Retail Says Use of Trade Name in Texas Part of "Multi-State" Marketing Strategy, Not Misleading
July 20, 2011
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Texas retail electric provider AEP Texas Commercial & Industrial Retail Limited Partnership said that use the trade names AEP Retail Energy and AEP Plus as it expands to mass marketing is not contrary to PUCT rules or PURA, while several REPs argued that the names would confuse customers given AEP's current branding of its TDU companies in the ERCOT market (39509).
As first reported in Matters (1/31 and 6/20), AEP Texas Commercial & Industrial Retail Limited Partnership is seeking to expand its Texas REP certificate to include service to customers under 1 MW. AEP Texas Commercial & Industrial Retail Limited Partnership's certificate currently allows it to use the trade names AEP Retail Energy and AEP Plus for its marketing to customers above 1 MW.
AEP Texas Commercial & Industrial Retail Limited Partnership said that it intends to retain the currently approved trade names, especially AEP Retail Energy, "as an important part of its planned multi-market, multi-state marketing."
Currently, AEP Retail Energy is active in the Ohio market, including the mass market, and AEP Retail Energy said that it, "also plans to enter retail markets in other states." As exclusively reported by Matters late last year (see 11/2), AEP said that it had plans for AEP Retail "throughout the east" in addition to Ohio and Texas.
"Being able to use the one name 'AEP Retail Energy' in those markets, in the residential and commercial markets in Texas and elsewhere will promote brand name recognition," AEP Retail told the PUCT.
AEP Retail argued that its trade names are not "deceptive", "misleading", or "vague." Subst. R. 25.107(e)(1)(B) prohibits REP business names that are deceptive, misleading, or vague.
"These names are not designed to give a false impression or intended to create a misunderstanding about the nature or status of the companies. Nor are the names stated in indefinite or imprecise terms. To the contrary, the names are stated in precise and clearly understood terms. And all three names are distinct from 'AEP Texas Central Company' and 'AEP Texas North Company,'" AEP Retail said.
AEP Retail further said that when the ERCOT market was opened, the plain language of PURA Section 39.157(d)(5)(B) and Rule 25.272(h) specifically allowed the TDU and its competitive affiliate to use the same corporate name, trademark, brand and logo, so long as a disclaimer was used. Additionally, the requirement to use the disclaimer expired in September 2005.
"Thus, where a name or logo is shared by the TDU and an affiliate REP, not even this disclaimer is required today, per express legislative declaration," AEP Retail said.
"This automatic expiration date manifests the Legislature's determination that the disclaimer safeguard would no longer be needed after that date," AEP Retail argued.
However, other REPs disputed AEP Retail's arguments concerning whether the trade names are misleading, and AEP Retail's specific arguments with respect to PURA.
Specifically, the Direct Energy companies argued that the expiration of the affiliate disclosure language in PURA in 2005 was, "presumably based on the Legislature's supposition that by that time residential and small commercial customers located within the utility's certificated service area would understand the difference between the two companies."
However, Direct Energy noted that the AEP name, brand, or trademark has never been used within the AEP Texas Central and AEP Texas North service areas to identify any mass market REP. "There has not, therefore, been the opportunity over time to inculcate the differences between REPs and TDUs that concerned the Legislature and, which, frankly, given the passage of time and the use of the AEP Texas brand [for the wires companies], are less likely to be cleanly differentiated today than they were in 2002," Direct said.
The Alliance for Retail Markets, Texas Energy Association for Marketers, and Direct all argued that the AEP trade names would be confusing to customers, conflate responsibility for reliability and outage restoration between the AEP TDUs and AEP retail electric provider, and lead mass market customers to believe that enrolling with the AEP retail electric provider would result in preferential distribution service.
Direct took the argument a step further, stating the problem is not solely with the names of the wires companies themselves, but the general "AEP Texas" brand AEP has built for AEP Texas North Company and AEP Texas Central Company, since the certificated REP name also uses "AEP Texas" as the first two words.
"To residential and small commercial customers, the AEP name for the entire period of competition, and even before, has been associated with the TDU's AEP Texas Central Company and AEP Texas North Company. This is particularly true within those service territories, where CPL Retail Energy, LP and WTU Retail Energy, LP were the affiliated REPs and still serve many customers," Direct said, which purchased the customers of these A-REPs.
"And as might be expected, the three letters 'AEP' have themselves become identified with the various AEP companies. The [Direct Energy] REPs are aware that service trucks are branded as 'AEP' rather than AEP TCC, for example, a testament to the universal understanding and use of the 'AEP' brand to stand for the AEP companies," Direct noted.
"But even beyond that identification, AEP has also chosen to brand itself as 'AEP Texas.' This brand presumably was intended to supplant the individual brands of AEP TCC and AEP TNC (and any other AEP company) and create an 'umbrella' brand for the AEP companies in the ERCOT competitive market," Direct continued.
"There are numerous public uses of the 'AEP Texas' brand that demonstrate this point. AEP Texas is the name of the company's main website and it is how the company refers to itself on that website. Customers are told on the Homepage of that site 'when to call AEP Texas,'" Direct noted.
Furthermore, Direct said that, according to a photograph on the AEP Texas homepage, AEP Texas is the name on the smart meters installed by AEP TCC and AEP TNC.
"Thus, in addition to the use of just the letters 'AEP' to refer to itself, AEP has consistently and ubiquitously branded itself with a name meant to encourage customers to think of the various AEP companies as existing under one roof ... The infusion and saturation of the brands 'AEP Texas' and 'AEP' into the market place creates a new and powerful opportunity for confusion and misunderstanding in the market," Direct Energy said.
Additionally, the Texas Energy Association for Marketers said that the PUCT's code of conduct rule demands that a, "utility shall not subsidize the business activities of any affiliate with revenues from a regulated service."
"AEP TCC and TNC developed brand recognition, and now AEP Texas [AEP Texas Commercial & Industrial Retail] has the chance to ride the coattails of that recognition," TEAM argued.
Furthermore, because distribution charges from AEP TCC and TNC have been paid by third-party REPs throughout the period that the retail market has been competitive, "this would create a situation where competitive REPs have funded the build-up of branding and customer good will that would now be used to compete against the REPs," TEAM said.
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