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Draft PUCT Order Would Find Commission May Review Shared Use of Name by TDU, REP Under Certification Standards
September 9, 2011
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A draft PUCT preliminary order would conclude that neither PURA Sec 39.157(d)(5) nor P.U.C. SUBST. R. 25.272 precludes the Commission from determining pursuant to P.U.C. SUBST. R. 25.107(e)(1)(B) whether a retail electric provider's business name is deceptive, misleading, vague, or otherwise contrary to Rule 25.272, and would direct the State Office of Administrative Hearings to determine whether AEP Texas Commercial & Industrial Retail Limited Partnership's use of the name AEP in mass marketing retail electric service would be contrary to Rule 25.107 (39509).
As only reported by Matters, AEP Texas Commercial & Industrial Retail Limited Partnership is seeking to expand its Texas REP certificate to include service to customers under 1 MW (8/31). 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 has argued that PURA 39.157(d)(5), which addresses the shared use of a trade name by a TDU and REP prior to September 1, 2005, is dispositive in allowing the shared use of the AEP name.
However, the draft preliminary order, to be considered at the September 15 open meeting, would state as a position of the Commission that PURA 39.157(d)(5) does not apply to AEP Texas Commercial & Industrial Retail Limited Partnership's application for an expanded REP certificate, "because this statute only allows a competitive affiliate to use the same corporate name, trademark, brand or logo as that of its affiliate TDU prior to September 1, 2005."
Under the draft preliminary order, the Commission would further find, "that neither PURA § 39.157(d)(5) nor P.U.C. SUBST. R. 25.272 precludes the Commission from determining pursuant to P.U.C. SUBST. R. 25.107(e)(1)(B) whether a retail electric provider's business name is deceptive, misleading, vague, or otherwise contrary to Rule 25.272."
Specifically, PURA 39.157 requires that the Commission adopt rules to ensure that "a utility does not allow a competitive affiliate, before September 1, 2005, to use the utility's corporate name, trademark, brand, or logo" unless the competitive affiliate includes a waiver on its business cards and for certain advertisements.
"This prohibition, without a waiver, is only required before September 1, 2005. The statute does not require this prohibition to extend beyond September 1, 2005, nor does it expressly preclude the Commission from continuing the prohibition. Moreover, PURA does not require the Commission to adopt rules to allow a TDU's competitive affiliate to use the TDU's corporate name, trademark, brand, or logo. PURA is simply silent on the shared use of the business names after 2005," the draft order notes.
The draft further notes that the Commission is also granted authority in PURA 39.157 to adopt rules to ensure that, "a utility does not give a competitive affiliate any preferential advantage, access, or treatment regarding services, other than corporate services; or act in a manner that is discriminatory or anti-competitive with respect to a non-affiliated competitive affiliate."
Furthermore, the draft would hold that PURA 39.352, which is the legislature's grant of authority to the Commission for the regulation of the certification of REPs, takes precedence over PURA 39.157. PURA 39.352(c) mandates that an applicant for REP certification, "shall comply with all applicable customer protection provisions, disclosure requirements and marketing guidelines established by the Commission and by this title."
The draft further concludes that SUBST. R. 25.107, which states that REP business names shall not be deceptive, misleading, or vague, falls squarely within the mandate of PURA 39.352(c).
"Therefore, under current Commission rule there is not an express prohibition against a utility and its competitive affiliate sharing the same or similar names, only that the business name not be deceptive, misleading, vague, or otherwise contrary to the code of conduct. Whether a business name, in whole or in part, shared between a utility and its competitive affiliate violates this rule is a question of fact and this determination is included in this preliminary order as an issue to [be] addressed at SOAH," the draft states.
"Consequently, the Commission disagrees with AEP REP's assertion that after September 1, 2005 it is categorically entitled to use the AEP brand in its business name. The plain language of PURA § 39.157(d) contains no such authorization and in accordance with well-established rules of statutory construction, the expiration of a prohibition is not the same as granting an affirmative right," the draft states.
"Today, neither PURA § 39.157(d) nor P.U.C. SUBST. R. 25. 272 are applicable to AEP REP's use of the TDU's corporate name, trademark, brand or logo, therefore neither can override the clear language of the Commission rule that prohibits the use of misleading or deceptive names," the draft would find.
Among the issues to be addressed by SOAH under the draft preliminary order are:
- Would AEP REP's use of either or both of the d/b/a's AEP Retail Energy and AEP Plus be deceptive, misleading, vague, or otherwise contrary to P.U.C. SUBST. R. 25.272 (relating to Code of Conduct for Electric Utilities and Their Affiliates), and therefore in violation of P.U.C. SUBST. R. 25.107(e) if AEP REP provides electric service to residential customers and small and medium non-residential customers for the entire state?
- If AEP's proposed use of either or both of the d/b/a's AEP Retail Energy and AEP Plus violates Substantive Rule 25.107(e)(1)(B) or any applicable PURA provision, should the Commission prohibit AEP REP from using the term AEP in its provision of electric service to residential customers pursuant to its Option 1 REP certificate?
- Does AEP's proposed use of either or both of the d/b/a's AEP Retail Energy and AEP Plus constitute a transaction between a utility and its competitive affiliate as described by P.U.C. SUBST. R. 25.272(e)(2), and if so does it meet the definition of an arm's-length transaction set forth in P.U.C. SUBST. R. 25.272(c)(1)?
- Will AEP's proposed use of either or both of the d/b/a's AEP Retail Energy and AEP Plus violate the PURA § 39.101(b)(5) requirement that a customer is entitled to receive sufficient information to make an informed choice of a service provider?
- Will AEP's proposed use of either or both of the d/b/a's AEP Retail Energy and AEP Plus violate the PURA § 39.101(b)(6) requirement that a customer be protected from unfair, misleading, or deceptive practices?
- Will AEP's proposed use of either or both of the d/b/a's AEP Retail Energy and AEP Plus constitute a violation the PURA § 39.157(d)(6) requirement that a utility not conduct joint advertising or promotional activities with a competitive affiliate in a manner that favors the competitive affiliate?
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