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Texas Should Stop Listing REP Rates On Power To Choose Site

April 20,2015



The Texas Power to Choose site has received criticism in the local press this legislative session, with the Houston Chronicle the latest to devote ink to the site ("Some say electricity website has power to confuse"), and we are left with a novel, albeit radical, thought.

Just stop listing REP offers on the site.

That would solve most of the problems.

Because to us, the heart of many of the problems isn't that electricity shopping, itself, is a hard process, it's that the way the Power to Choose site presents offers inherently makes it complex.

Why?

Because it's trying to force a square peg into a round hole -- people look to the site to determine the "best" rate in the market -- but such a rate does not exist.

The best rate depends on the customer -- how much electricity they use, when they use it, and what their level of risk tolerance is.

Moreover, the site's listing of per kilowatt-hour rates reinforces the notion -- rapidly becoming outdated -- that customers should shop based on the per kWh rate, rather than total energy spend. This forces compromises -- the largest of them being the quoted average all-in rate at three usage levels, with 1,000 kWh as a default.

This results in the rate being compared by the customer having little relevance to their real world bill.

Some 15 years ago, this was a necessary compromise. Unless customers wanted to sit down with their bills and calculate what their bills would have been under potential new rate plans, there was no simple way to present cost information to customers.

But Power to Choose's time has passed.

With the availability of data from Smart Meter Texas, customers should not be shopping based on an average all-in rate.

Instead, using data pulled from SMT, they should be presented with what their customer-specific monthly cost of a product would be, showing what their cost would have been for the last few months had their new product been in effect, and forecast future cost based on estimated usage levels (informed by prior SMT reported usage).

This way, instead of customers comparing "phantom" all-in rates at 1,000 kWh when that is not their usage level, customers will be able to compare actual monthly bills for each product. What could be simpler?

We understand several of the online shopping portals/brokers have this functionality currently. This is how customers should shop.

Maintaining rates on the Power to Choose site pulls customers away from these more innovative and useful comparisons, and hinders how customers should think about shopping.

We also do not feel it is appropriate for Power to Choose to offer comparisons based on SMT data, since that is a competitive service that can, and is, adequately performed by the market.

Power to Choose can remain as a useful tool for shopping education -- explanation of the role of REPs vs. TDUs, complaint info, and the like

But its days as a useful pricing portal have passed. Customers would be better served if the site ceased offering rate comparisons, as better and more useful information is at the customers' fingertips from a variety of providers

We have not had time to determine whether eliminating rate comparisons from Power to Choose would require a legislative change, but it is worthy of consideration regardless



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Texas   Energy Shopping  

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