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TXU Posting Examples of Percentage Increases in Variable Rates Online

August 2, 2011
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TXU is posting on its website examples of the percentage rate increases seen in the first few months of select variable products in the ERCOT market.

TXU made the decision to not offer variable rates in the latter half of 2009, offering only fixed and indexed products. At that time, TXU added to its website excerpts from nine competing REPs' variable product Electricity Facts Labels, terms of service, or other marketing materials, quoting the disclosures required by PUCT rule of the variable nature of the rate, and that the rate could change in future months at the REP's discretion.

Now, TXU is posting examples of the percentage that variable rates increased through the first four months of select variable rate plans. TXU called the examples a "snapshot" meant to draw customer awareness to actual increases seen in the market.

TXU's variable rate information site specifically cites rate increases of 50%, 55%, 60%, 70%, or 80% seen on the second, third, or fourth bill for certain variable rate products, compared to the original Electricity Facts Label price at 1, 000 kWh average monthly usage.

Example products on TXU's website include YEP Guaranteed Savings and No Long Term Commitment plan (Oncor TDU), Southwest Power and Light Texas Independence Promotional Month plan (Oncor TDU), Bounce Energy Thrifty Saver Introductory plan (CenterPoint TDU), Dynowatt Standard Variable Price Product (Oncor TDU), Stream Energy Intro/Variable Price plan (Oncor TDU) and StarTex Power Promotional Month to Month plan (CenterPoint TDU).

However, TXU is not posting, and does not plan to post, the actual variable rates in cents per kWh associated with each competitor's product (which any REP can now do since variable rate history must be posted by each competing REP online). This is notable because very large percentage increases in low rates can still produce competitive end-state rates.

For example, a 50% increase in a 5.5 cents per kWh introductory variable rate results in a rate of 8.25 cents, which is high when compared to other introductory variable rates, but on the low end of the fixed market.

Of course, the large increases can also produce non-competitive rates, and TXU's cited example of an 80% increase was from an initial variable rate of 6.7 cents, resulting in a rate of 12 cents (this rate information is not on TXU's site but was provided to Matters).

Regardless of the specific examples, TXU's larger point is that, under variable rate plans, REPs can change prices at their discretion with no explicit (direct) notice to the customer (but REPs must make the rate that will apply on the next bill available for the customer to look up).

TXU does offer indexed products, which do not require advance notice of price changes. However, for its NYMEX-based indexed product, TXU offers customers, who opt-in, a monthly email with NYMEX pricing information and an online tool to calculate the price per kWh. This information is also available via TXU's website for customers not opting-in. TXU also stressed that while the indexed rates change, they cannot change at TXU's discretion.

Earlier this year, TXU Energy conducted a telephone survey of 750 Texans living in areas that are open to electricity competition. According to the results, two-thirds of customers did not understand that electricity providers can raise customers' rates as high as they want on certain variable rate plans. Also, more than one-half of consumers who reported being on variable rate plans did not think their providers could raise their rates without telling them first, TXU's survey found.

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