State regulators are considering a modest upgrade to the electricity shopping website Power to Choose that would filter out some of the more blatant pricing gimmicks that have raised the ire of consumers who find themselves getting hit with unexpectedly high costs.
The proposal is aimed primarily at pricing schemes that offer low prices if households use, say, 1,000 kilowatt hours per month or less but whack them with hefty charges — sometimes over $200 — if they exceed that threshold by just one kilowatt hour. The Public Utility Commission is expected to vote on adding the filter at its regular meeting Thursday.
The commission sharply criticized retail electricity providers earlier this summer for misleading consumers with confusing, too-good-to-be-true pricing plans on its shopping website PowertoChoose.org. Commissioners put the state’s power providers on notice to make their plans easier for consumers to understand or regulators would step in and do it for them.
Power to Choose was designed to help Texans shop for electricity plans, but retail electric providers have flooded the web site with pricing gimmicks and convoluted terms that make it difficult for consumers to make comparisons and choose a plan that works for them. DeAnn T. Walker, the chairman of the Public Utility Commission, directed commission staff to figure out how to improve the site that has become so confusing that a cottage industry has developed to guide consumers through the maze of electricity buying.
“It has the potential to lower the chance for unsuspecting consumers to fall for overpriced gimmick rates,” said Fred Anders, founder of Texas Power Guide, a shopping site that helps consumers find the cheapest plan based on their usage history.
But, Anders said, the proposal doesn’t address more fundamental issues with Power to Choose, including a structure that focuses on three reference points — 500, 1,000 and 2,000 — kilowatt hours, which don’t necessarily reflect how consumers use power, or the seasonal changes that affect electricity consumption. What looks like a good deal when customers consider their average usage might not turn out so good in certain months — say July or August.
Retail electric providers tailor their electricity offers to land on the first page of Power to Choose by showing a low average price at the 1,000 kilowatt usage level, according to the commission staff memo. The plans may be beneficial to some customers who can stay below the threshold, but for most customers, the plans end up costing significantly more than the advertised average price over the course of the contract.
Commission staff recommended adding a new filter on Power to Choose so that plans that charge a different amount per kilowatt hour depending on how many kilowatt hours would not be shown as options. The site already allows consumers to filter plans according to several criteria, including customer ratings.
Retail electricity providers are already adjusting. A day after commissioners slammed them in June for misleading offers on PowertoChoose.org, the biggest electricity seller in Texas removed its attention-getting offers from the site.
In June, NRG Energy stopped listing plans in Houston that cost $26 a month for 1,000 kilowatt hours, or 2.6 cents per kilowatt hour. But consumers who signed up the Wise Buy Complete, a 15-month contract, and used 1,001 kilowatt hours or more were also required to pay an extra monthly fee of $226 - which worked out to 25.2 cents per kilowatt hour. Those plans were offered through one of NRG’s retail electricity companies, Pennywise Power.
On Tuesday, NRG Energy applauded the recommendations made by the commission staff.
“We believe that the changes will make the site easier to use and the offers easier for consumers to understand, while eliminating confusing offers that had been dominating the site,” said NRG spokeswoman Pat Hammond.
Direct Energy, the state’s third biggest electricity seller, is also on board, noting that it advocates for transparency. Direct Energy dropped its low teaser rates shortly after the commissioners voiced concerns earlier this summer.
The commissioners will also consider a staff proposal to limit the number of plans each company can offer to prevent flooding the shopping site with offers that are barely distinguishable from one another. Some companies have more than 30 plans on Power to Choose, according to the staff memo.
The commission staff also recommended making how-to videos and other guides to help consumers through the shopping process.