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AEP Retail Energy Seeks Rehearing of Texas Decision Prohibiting Use of AEP Name by Mass Market Retail Provider

By: Energy Choice Matters |

AEP Texas Commercial & Industrial Retail Limited Partnership d/b/a AEP Retail Energy has sought rehearing of the Public Utility Commission of Texas’ decision denying its application to amend its REP certificate to serve customers under 1 MW.

As first reported by Matters, the Commission denied the application by concluding, “[t]he sharing of the AEP acronym and AEP’s red parallelogram logo by both AEP Retail Energy and its affiliated TDUs as described in this case violates the prohibition in PURA § 39.157(d)(6) P.U.C. SUBST. R. 25.272(h)(2) of joint advertising and promotional activities that favors a competitive affiliate.”

While Matters typically does not cover rehearing requests which by their nature may only repeat evidence and arguments as initially raised during the contested case, rather than anything novel, AEP Retail Energy’s rehearing request merits attention for two reasons.

First, the issue on which the Commission ultimately adjudicated the application — the joint advertising argument– received relatively little attention during the proceeding. For example, Commission Staff, the Direct Energy companies, and the Texas Energy Association for Marketers each only devoted a single paragraph to the issue in their initial post-hearing briefs, while devoting much more significant time to the question of whether use of the AEP trade name was deceptive or misleading under SUBST. R. 25.107(e)(1)(B).

And while Direct’s and TEAM’s briefs addressed the issue more broadly, Staff’s initial brief only raised the joint advertising issue with respect to what was perceived as a shared website among the AEP companies, and not in the broader context of the shared branding of the AEP acronym itself and red parallelogram logo cited by the Commission in its order rejecting the application.

Second, the Commission’s written order leaves unanswered questions for the market, opening the door for arguments that the decision is inconsistent with precedent or otherwise unreasonable and merits rehearing.

Specifically, the Commission’s written order was confined to the matter at hand, which was whether or not to grant AEP Retail Energy’s application for an expanded REP certificate. While it is expected the Commission only adjudicate those questions before it, its conclusion in the instant case that the use of the AEP acronym and logo by a REP constitutes prohibited joint advertising only begs the question: are AEP Retail Energy and/or the AEP TDUs currently in violation of the joint advertising prohibition because there is an existing REP in the market called AEP Retail Energy, who was previously authorized, and is still authorized, by the Commission to serve customers over 1 MW under the name AEP Retail Energy?

Although the Commission’s order regarding the REP certificate amendment stressed its conclusions resulted from the specific facts as described in the instant case, a Finding of Fact broadly states: “AEP Retail Energy and the AEP Texas TDUs sharing of identical AEP branding is joint promotion that will cause confusion among consumers and result in favoring AEP Retail Energy over non-affiliated REPS.”

Regardless of specific facts, it seems hard to justify that the above finding of fact only holds true with respect to service under 1 MW, but not service over 1 MW. In other words, if simply the sharing of identical AEP branding is joint promotion, such shared branding is joint promotion regardless of whether the REP serves the mass market, or only large customers. But as noted above, such a conclusion runs into the Commission’s prior approval of the certificated name AEP Texas Commercial & Industrial Retail Limited Partnership and trade name AEP Retail Energy for a REP serving customers over 1 MW.

Indeed, if the sharing of identical AEP branding is joint promotion, it must be asked why an enforcement proceeding against the AEP TDUs for a code of conduct violation, and a petition to revoke the REP certificate of AEP Retail Energy (for violating several provisions of Subst. R. 25.107 due to the joint promotion) have not been initiated. The only reason to not initiate such proceedings is because the shared branding is not joint advertising when limited to the universe of customers over 1 MW, but as noted above that seems to be a fine line to draw.

Of course, this is in contrast to the issue of whether the use of the AEP name by a REP is deceptive or misleading — a question the Commission chose not to address in its order — which can be more easily distinguished based on customer class served, due to varying sophistication levels of small versus large customers, and the judgment that what may be misleading to less sophisticated customers does not constitute a problem for more sophisticated customers. Whether the shared use of a name and logo constitutes joint advertising seems less dependent on the audience, and would appear to be true regardless of the universe of customers involved.

As to AEP Retail Energy’s specific request for rehearing, the company hit all the expected arguments.

Matters would note that AEP Retail Energy does devote significant time to arguing that the mere sharing of a common brand name and logo by a utility and its competitive affiliates does not constitute joint advertising as a matter of law. However, the Commission’s order never reached this conclusion, and the Commission in a finding of fact explicitly stated, “a regulated utility and a competitive affiliate are not categorically prohibited by PURA and Commission rules from sharing the same or similar names.” The Commission did not find that any shared use of a name by a utility and REP constituted joint advertising, but rather that the shared use “as described in this case” constituted joint advertising.

AEP Retail Energy also argues that the Commission’s joint advertising conclusion is contrary to Commission precedent

“Most notably, AEP REP has been allowed continuously to use the term AEP in its name since 2001, in serving customers whose loads are one MW or more. The Commission’s order does not attempt to explain how this fact squares with the logic of its decision here, nor could it plausibly do so,” AEP Retail Energy said.