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TDU Website: "AEP Texas" is "Energy Delivery Company"

July 26, 2011
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AEP Texas Commercial & Industrial Retail Limited Partnership called arguments that its certificated name and trade names AEP Retail Energy and AEP Plus would be confusing to mass market customers in Texas speculative, but its excerpt in a reply brief of language on the AEP Texas website appears to undermine, rather than bolster, this conclusion (39509).

As first reported in Matters (1/31 and 6/20 and 7/20), 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 the maturity of the ERCOT market, evidenced in customer migration away from the former affiliated REP, is indicative of customer knowledge of the distinction between TDUs and REPs even at the mass market level, and that its use of the AEP name would thus not be confusing. However, it cited no actual data or survey responses regarding customer perceptions of TDUs versus REPs aside from equating migration to customer awareness of market structure.

AEP Texas Commercial & Industrial Retail Limited Partnership further cited migration data as showing that the change in the name of Oncor back to TXU Electric Delivery in 2004 had no discernable effect on the retail markets or the rate of migration away from affiliated REP TXU Energy, indicating customers were not confused by the renewed presence a TDU named TXU Electric Delivery and a REP named TXU Energy.

AEP Texas Commercial & Industrial Retail Limited Partnership also attempted to counter the Direct Energy companies' argument that the issues raised by the AEP trade name are especially problematic given that the AEP wires companies in most customer-facing interactions brand themselves as "AEP Texas" rather than AEP Texas Central or AEP Texas North.

"The AEP Texas website clearly explains not only how AEP Texas stands just for the two AEP TDUs in ERCOT but also how those utilities are distinguished from REPs," AEP Texas Commercial & Industrial Retail Limited Partnership said.

AEP Texas Commercial & Industrial Retail Limited Partnership further excerpted language from the TDU website informing customers that:

- "As an energy delivery (wires) company, AEP Texas delivers electricity safely and reliably to homes, businesses and industry ... AEP Texas also maintains and repairs its lines, reads electric meters, and handles connections and disconnections as directed by the Retail Electric Providers (REPs) selling electricity in the area.

- "AEP Texas is an energy delivery company that maintains the electric system for a large area in south and west Texas and is regulated by the Public Utility Commission of Texas. Other functions in the competitive electric marketplace in Texas such as billing and payments are handled by numerous Retail Electric Providers (REPs).

- "[And] no matter whom you choose as your REP, we'll continue to deliver electricity as well as maintain and repair the electric system, just as we have done for more than 80 years." [all emphasis by AEP Texas Commercial & Industrial Retail Limited Partnership]

It is not disputed that this language accurately describes the current AEP Texas that interacts with mass market customers.

What AEP Texas Commercial & Industrial Retail Limited Partnership apparently misses is that, once AEP Texas Commercial & Industrial Retail Limited Partnership begins marketing to mass market customers, there is a legitimate question as to who exactly is "AEP Texas."

In short, the language on AEP Texas' website states that AEP Texas (not AEP Texas Central nor AEP Texas North) is a wires company, but now a REP called AEP Texas Commercial & Industrial Retail Limited Partnership will also be selling to mass market customers. Does its use of the words "AEP Texas" in the first two words of its name indicate that it is the same company? The most logical conclusion is not that it is a separate and legally distinct company under the shared corporate umbrella (allowed by PURA), but that it is a direct subsidiary of the larger "AEP Texas" wires company which is targeting serving C&I customers.

While AEP Texas Commercial & Industrial Retail Limited Partnership cites the TXU example, it is not analogous, because AEP Texas Commercial & Industrial Retail Limited Partnership is seeking to graft onto the name of a self-described "energy delivery company" (AEP Texas, though as noted by intervenors, AEP Texas is not the CCN name) additional words which somehow transform this wires company into a legally distinct REP. In contrast, to Matters' knowledge, TXU never described itself as an "energy delivery company," (thus adding "Energy" to simply TXU to make TXU Energy did not present this problem) nor did the TXU corporate family ever contain a REP where the REP simply added words to the end of the name of the TDU, whether the TDU was named TXU Electric Company, TXU Electric Delivery, or Oncor (e.g. there was no "TXU Electric Company Commercial & Industrial Retail Limited Partnership")

Even if AEP Texas Commercial & Industrial Retail Limited Partnership primarily uses AEP Retail Energy as its trade name, this "AEP Texas" issue will still arise, given that the certificated AEP Texas Commercial & Industrial Retail Limited Partnership name must appear on all relevant customer materials.

The issue arises even without shortening the REP's name to simply "AEP Texas", which the Direct Energy companies said is human nature.

"Thus, the issue is not whether the names are 'distinct' because they are not identical; the issue is that they all start with AEP and, given AEP's marketing of 'AEP Texas,' are highly likely to be seen by residential and small commercial customers as all being part and parcel of one company under one roof - with the confusions and misapprehensions that follow," Direct said.

Direct Energy noted that AEP Texas Commercial & Industrial Retail Limited Partnership made this point in its initial brief, by excerpting from Champion Energy Services' website the statement that "Our name says it all: Champion Energy is champion."

AEP Texas Commercial & Industrial Retail Limited Partnership was attempting to make an argument about the use of trade names across markets, but Direct Energy noted that the highlighted quotation only reinforces the problem with the AEP Texas Commercial & Industrial Retail Limited Partnership or AEP Retail Energy names: "in Texas AEP's name says it all: AEP is AEP," Direct noted.

AEP Texas Commercial & Industrial Retail Limited Partnership reiterated that shared names are expressly permitted by PURA, and said that, "[a] party who seeks to override this presumption (the Intervenors in this case) should have a heavy burden, meet a high standard, in order to succeed."

"Such a party must substantiate (not just merely assert) some significant harm or detriment to the retail competitive markets. Surmise and speculation are not sufficient. Tangible proof must be offered," AEP Texas Commercial & Industrial Retail Limited Partnership said.

However, the Texas Energy Association for Marketers and Alliance for Retail Markets said that PURA's allowance for the use of shared names is not dispositive, as PURA, in two separate sections, also obligates the Commission to protect against "misleading" and "deceptive" practices.

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