Submitted by: Matt Oberle
Ever since the de-regulation of the electricity market in Texas at the beginning of the century, there has been a lot of confusion at pretty much every single possible turn. Now, keep in mind, every other state in the country has viewed Texas and their transition as the ideal model in establishing their own deregulated electricity markets. The irony of this statement is that while Texas has done a great job of being the only state up to this point to launch a successful competitive electricity market, if you asked many of the residents that live in the deregulated areas of Texas, most of them think that deregulated electricity is a failure, that it is another way for big companies to make a profit on the backs of hard working Texans, and in general many people don t even understand how the marketplace even works.
So why the disparity between the people who live in Texas and the other states looking to do what Texas has done? A big part of the problem is communication. In fact, I would say that the biggest problem with the Texas electricity model period is a lack of communication period, whether it s from the TDSPs (Transmission and Distribution Service Providers) or the REPs( Retail Electricity Providers), and probably even some of the regulatory agencies that oversee things. Did you have any idea what those acronyms meant? Or even what the entities do after I spelled out their full names? Well, if not, then I ve just demonstrated the problem at hand (if you did know, then +1 to you, you get a cookie). The biggest problem here is communication. In short, despite the fact that we ve been operating in this electricity market for almost 10 years now, half of the people still have no idea how it works. After Houston was hit by Hurricane Ike and parts of the city went days or even weeks without power, electricity providers, radio stations, and newspapers were flooded with praise and complaints for X electricity provider for taking Y amount of time to get their lights turned back on. People don t even understand that in this system, the guy they pay every month for electricity has NOTHING to do with getting their lights on back after an outage. That responsibility relies with the TDSP, which are the companies responsible for maintaining the power lines and meter readings. In Dallas, that company is Oncor. In Houston, that company is Centerpoint. Sure, the confusion is understandable since those responsibilities all used to lie with one company (TXU and Reliant in Dallas and Houston respectively) but now there is a company for maintaining the lines (TDSP), and then there is a retail company responsible for selling the electricity (REP). I don t think I m being too demanding when I say that after a decade, this confusion should have been cleared up and the basics of how the market works should be common knowledge. And the unfortunate side effect of all of this is that now the REPs and the TDSPs often end up in a tennis match of blame when a customer has a bad experience, with each party pointing to the other as being responsible for higher bills, or bad customer experiences.
[youtube]http://www.youtube.com/watch?v=fbkv5xOLvnA[/youtube]
Some, but all too few REPs, do a great job of communicating with their customers and work hard to try and give open avenues for communication, to answer questions, and generally act as a positive resource for consumres. Most, however, do not. And this attitude permeates most of the different organizations in the Texas electricity space, all the way to the top. I have my theories as to why this attitude exists, but I ll preface it by pointing out that it s just my opinion and is speculation based upon different experiences I ve had personally. I honestly think that part of the communication problem is that all of these very large, formerly government companies, weren t used to having to operate under such public transparency. In my experience, the larger the company, the slower they move, and the more sluggish they react to and adopt change. Well, you take a field where the people may have worked there for 20, 30 years or more, people not used to having to cater and help a customer base. More often than not, many people were used to having it the other way around, with the customer s adjusting to the big incumbent electricity providers because they had little other choice in the matter unless they were ready to go without electricity. It doesn t take much to imagine the people working at Oncor or any of the other TDSPs, who used to be shielded by the public facing portions of the electricity company (in Reliant and TXU) now suddenly having to deal or try to deal with a public that can directly approach them. And these people unaccustomed to that kind of public relations and information sharing who had spent decades used to doing their daily responsibilities in a vacuum are now responsible for explaining a brand new system of deregulated electricity? Personally, I m not surprised things are still so murky for so many people.
Lets take a look at a couple examples of what I mean, including a current issue that s getting a lot of public attention, and that s the smart meters being rolled out in Oncor territory and how they re dealing with public perception. Smart meters are a big deal, and they ve gained a fair amount of publicity in recent months for a few different reasons. One is the potential of the smart meters to allow customers to see their usage in real time and find out new ways to save money on their electricity bills. Another issue is that the meters might be hackable. A third problem, and the problem that is causing the most public backlash, is that many of the people who have gotten the new smart meters installed are reporting huge increases in their electricity bills, almost overnight, as well as saying the meters are spinning faster than their previous analog meters. The response by Oncor? Pretty much only to tell people that they are wrong and everything is working fine, despite the fact people can point to their bills from a month or two ago and see that something, is in fact, not the same. Oncor claims to have studied these instances, and that everything is working properly. However, the public outcry has gotten so bad and so loud, Oncor was forced into hiring a third party to study the smart meters and come to their own determination over whether the meters are working correctly. But other than that, Oncor has been silent.
Now, there s an underlying piece of irony here that not a lot of people are talking about, most people have not even considered, and that Oncor certainly can t come right out and tell people. And again, I don t have any proof of this, but there s certainly another option to consider here. What if these new meters, that are showing higher bills, are actually reading correctly, and the fact that the bills are higher are because the old meters weren t functioning properly? What if Oncor (and formerly TXU before it) have been giving away free electricity to customers for decades and decades? Look at the circumstantial evidence here. A bunch of people who have had low electricity bills for decades get brand new, digital technology smart meters in place of their very old analog meters. And suddenly, their bills shoot up much higher. And this phenomenon has taken place dozens if not hundreds of times in Texas since these new meters have been installed. Do we think it s more likely that the older analog smart meters might have malfunctioned, or that the brand new digital meters Oncor has spent millions on are full or lemons? I ll bet my money that Oncor has been giving away free electricity for decades, and people are just now having to pay for the amount of electricity they ve actually been using. Now, as I sit here and tell Oncor to communicate more effectively and regularly with their customers, the irony comes into play because this is the one thing Oncor can under no circumstances admit to the public. For one, most people might not even believe them, even if it were true. And more importantly, Oncor would essentially be admitting to the public that they ve been negligent and allowed the system to be antiquated, and that by giving away free electricity for decades that the company has basically been completely incompetent. So they have to say nothing on this front, because they can t admit to having been asleep at the wheel for years upon years. So in regards to the Smart Meters, Oncor simply says they re functioning properly and little else.
However, this would be the perfect opportunity for them to be extremely vocal with their customers on another front. I believe now that they have hired a third party to research the meters, they re fine being quiet. However, when those results are released (and I expect them to say that the meters are working correctly), Oncor should be front and center explaining some of the other things that have caused the bill increases, not just recently, but since the market deregulated. Find people who have had the smart meters installed and have no bill problems whatsoever and cite them as examples. Use this opportunity to explain how the entire deregulated system works, do a better job of explaining people s bills, and educate the public about the system so these kinds of questions and misunderstandings can get explained. Open a dialogue with the consumers of Texas, and if there are some legitimate questions, answer them. Look into the cases of the smart meters. Talk about how natural gas prices skyrocketed two summers ago, and as a result, so did the electricity prices. Point out that now that the gas prices are rock bottom, we re seeing electricity prices get much closer to historic levels. Point out that compared to the rest of the US, Texas electricity rates are still below average. Just put information out there for consumers to get to easily. If I had to guess, this smart meter situation is another instance that will end up with customers feeling like they re being taken advantage of and left angry, but there is a genuine opportunity here for the TDSPs to step up and interact positively and communicate with the people to whom they provide electricity. I hope they take advantage of it, and the other TDSPs and more of the close-mouthed REPs are paying attention and follow their lead.
About the Author: Matt Oberle is the manager of Texas Electricity Ratings (
TexasElectricityRatings.com
), a website that allows customers to take part in the deregulated electricity market of Texas. Consumers can submit reviews about their electricity providers as well as shop by price and company ratings.
Source:
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