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In the world of Texas electricity, free is not always free

By: Dave Lieber |

Can a company say something is free when it’s not? Can a company put the word free in the title of a product even when customers have to pay?

Or worse, can a company selling this product with the word free in the title actually charge the highest rates around?

That’s what’s happening now, according to some critics, with revolutionary new plans for free electricity on nights or weekends offered by TXU Energy and competitor Reliant Energy.

Some people tell The Watchdog they’re confused.

Check this out: TXU Free Nights promises free electricity every day from 10 p.m. to 6 a.m. But what about the rest of the time? A residential customer gets slammed with an outrageous 18 cents per kilowatt-hour rate, about double what anybody else would pay on a normal price plan offered by most companies.

TXU Free Weekends promises free electricity for 48 hours beginning at midnight Friday. But during the week, expect to pay 19 cents per kwh. Holy moly! It’s free, but it’s expensive when it’s not.

Both plans are 18-month contracts with whopping early cancellation fees of $295 that aren’t even prorated. The only good thing — and this is important — is that TXU gives you 60 days to bail out of these programs without a cancellation charge if you’re not happy.

Reliant’s Free Weekends plan tacks on an extra four hours on Friday night, starting at 8 p.m., but the cost is almost 15 cents per kwh the rest of the time plus an extra $6.48 a month, which is part of Oncor’s delivery charge.

A difference is that TXU says it waives the Oncor charge during free hours, but Reliant doesn’t, meaning electricity used during free time is not entirely free. Reliant also gives its customers a free Nest Learning Thermostat, a $249 value.

With 1.5 million customers and more than 40 percent of the market share, TXU deserves credit for not running in place and shaking up its offerings. Let’s detour for a moment and give TXU even bigger credit for its remarkable turnaround in customer service in the last year or so.

Four years ago, state regulators received more than 4,000 complaints from Texans about their electricity company. Asia-based customer service centers frustrated customers, as did an antiquated billing system left over from when TXU’s legacy company was the region’s utility monopoly. Many customers jumped to one of TXU’s 50 or so competitors.

Every year since, TXU has cut its complaint numbers in half. This year, TXU has fewer than 400 complaints before the state Public Utility Commission. That’s a truly remarkable turnaround.

Sadly, or maybe not, this comes at the same time TXU’s parent company, Dallas-based Energy Future Holdings, could be weeks away from filing what would be — with more than $40 billion in debt — one of the largest bankruptcies for a company not in the financial industry.

In the midst of this, TXU brags that almost 100,000 customers — 1 in 15 — have signed up for a “free” electricity program.

Dick Bunting of Bonham tells me he studied the plans and says “this makes my blood boil.” The title sounds good, he says, “but looking into it, you will find it is one of the worst deals out there in electric provider land.” He fears trusting seniors will sign up for the plan not knowing what they’re getting into.

TXU spokesman Michael Patterson says company reps are trained to ask a lot of questions before allowing customers to sign up for a program. “We want people to really understand and be happy with their selection,” he says.

One TXU competitor, Entrust Energy of Houston, created a truth-in-advertising campaign to show that the Entrust rates would save customers a thousand dollars or more in comparison to the free plans.

Entrust spokesman Kevin West said, “It’s interesting that TXU is pitching that this is so ‘free’ when in reality customers on these plans will pay a lot more in the non-free period.”

(Note that the PUC announced last week that Entrust agreed to pay $60,000 to settle an investigation into alleged violations of consumer protection rules.)

An analysis by the Texas Coalition for Affordable Power, which pushes for transparency in electricity pricing on behalf of member cities, also questions the plans, calling them “gimmick electric deals.”

“Let’s take free nights,” coalition analyst R.A. Dyer says. “If you work at night and sleep during the day, you’re still going to have to run your air conditioner during the day.”

He continues, “The main webpage of TXU’s pricing page doesn’t mention the 18-cent price for daytime hours. You have to go to the Energy Facts Label to find that.

“Also, these are 18-month, fixed-rate deals with a $295 early cancellation fee. Once you’ve figured out you can’t live the vampire lifestyle forever, or you figure out that the [kwh] rate is too high, you can’t walk away from this deal without paying a pretty hefty cancellation fee.”

TXU’s Patterson doesn’t agree that information is withheld from consumers. That’s not the way the new, improved TXU operates, he says.

“We always want to be the ones that are trustworthy and transparent in our pricing. We don’t hike fees. We’re straightforward, and we’re competitively priced.”

Bottom line: Texas retail electricity pricing is needlessly confusing. Every company has its own way of presenting its prices so numbers can’t easily be compared. Early cancellation fees are outrageous. Marketing is sometimes confusing, if not downright misleading. The fine print is everything.

And free? In the world of Texas electricity? Come on.