Our electric company went bankrupt and randomly put us with Reliant. They are charging us 27.7 cents per kilowatt hour, up from 11.9 cents with our old provider. They did this without any written or oral notification. We just happened to run across an article online saying they filed for bankruptcy. Is this legal?
Right off the top of my head, I say that's F'd up. There's gotta be a clause in your initial signed contract about what happens if they can't provide the service after a while for whatever reason. Have you read their statements since then? They could have also changed those clauses without your knowledge... The fairest thing, I'd say, would be for them to (1) let you pick your own provider when they "went south," or (2) if they pick one for you, that it matches what they were charging you. Dude, that is seriously F'd up.
Luckily it's only been four days at that rate and my roommate was on the phone with Reliant to at least lower the rate, but still.
I read about that a few days ago, but 27.7kwh is insane.. I'm with Spark and I'm locked into 11.9kwh right now and I'm getting worried that they could go under too.. These energy prices are getting out of control and with the power grid problems ercot are facing it's not going to help the situation get any better.. Good luck RM
It's called the Provider of Last Resort (POLR). Different areas have different ones assigned by the Public Utilities Commission. Reliant's probably the most common. -------------- Sharp Power-Price Rise Hits Texas Officials Fear Surge Could Hurt Market; Another California? By REBECCA SMITH Wall Street Journal - May 30, 2008; Page A3 Wholesale power prices in Texas have surged to new heights, confounding market officials and worrying regulators who see early signs that the situation could destabilize the state's deregulated electricity markets. The spikes in wholesale power prices -- ominous and so far unexplained -- could take a big toll on both power providers and electricity customers if they persist. The state's utility commission held an emergency meeting Thursday, "which shows the level of concern," said commission spokesman Terry Hadley. Under electricity deregulation in Texas, businesses and individuals can choose to buy their power from more than 100 suppliers, who purchase electricity from power generators or from daily auctions. The price spikes are already overwhelming some small electricity suppliers. Two retail electricity service providers -- National Power Co. Inc. and Pre-Buy Electric LLC -- have defaulted on certain agreements, and 15,000 of their customers have been reassigned to "providers of last resort," exposing those customers to very high prices. "Two or three more [providers] could exit this week because they're having major difficulties," said energy consultant Denise Stokes, head of Competitive Assets LLC in Red Rock, Texas, near Austin. The situation will eventually cost consumers "tens of millions of dollars," though it may take weeks to show up in utility bills, according to Dan Jones, the state's independent market monitor. Mr. Jones said he and other grid officials are examining the computerized system that is used to balance generating supplies with consumer demand, as well as market rules and the conduct of market participants. Until last month, high prices were an occasional event in the spot market but weren't a cause of special concern. In the past eight days, though, blisteringly high prices have become chronic, suggesting something is broken or that manipulation of the market may be occurring. Earlier this year, Texas raised the maximum price a generator may seek for selling bulk power in daily energy auctions to $2,250 a megawatt hour from $1,500 a megawatt hour. The state has the highest such bid cap in the U.S. In seven out of the past 10 days, spot-market prices exceeded $2,000 a megawatt hour for various lengths of time each day in certain parts of the state, even though electricity demand was nowhere near the system's limits, as it might be on a hot summer day. In fact, demand is expected to rise at least 20% from current levels by late summer, adding to concerns about runaway prices. On May 23, for example, the spot price surged above $4,000 a megawatt hour (equivalent to $4 a kilowatt hour) by 5:30 p.m., one of the highest prices in memory. Although only a small portion of the electricity consumed in the state is purchased through this spot market, which is operated by the grid operator, the Electric Reliability Council of Texas, the price often is used as a benchmark for other contracts. Officials fear that if prices continue to be high, it could create a cascading problem in which electricity resellers are driven out of business because they are paying more for electricity than they can charge. Even if providers do pass costs onto customers, they may see higher default rates because consumers -- already struggling with high gasoline and diesel prices -- can't afford the higher bills. When a retail service provider ceases business, its customers often are transferred to a backup supplier known as the provider of last resort. Texas rules permit that company to charge its new customers as much as 130% of the average spot price for electricity in the preceding month. So the higher the spot price, the more money it can charge its customers. If a company bought power only at especially high-priced times of the day or if it sold electricity at fixed prices, it could find itself unable to pay for its power purchases and could default, throwing still more consumers onto other suppliers. For some people, the situation elicits feelings of déjà vu. California's deregulated market went through a crisis from May 2000 until June 2001, when wholesale electricity prices surged, reflecting tight supply conditions that were exploited by some power traders, such as those at Enron Corp. The state's biggest utility, Pacific Gas & Electric Co., filed for bankruptcy protection because it obtained its electricity through a spot market at prices far higher than what it was permitted to charge its customers -- a mismatch that could happen in Texas, as well. The Texas Public Utility Commission on Thursday expressed concern about reports that consumers are beginning to see prices of 25 cents to 35 cents a kilowatt hour, double prevailing prices. The Texas market is the most deregulated of any state market. Under the deregulation plan, most utilities broke themselves into different companies, some of which were kept and some sold. TXU Corp., now part of closely held Texas Energy Holdings, was unique in that it retained all the business lines, including the state's biggest generation company; a retail electricity-sales company; and a still-regulated energy-delivery unit. More than 100 companies are electricity resellers, obtaining wholesale power from the markets operated by the Electric Reliability Council of Texas or from generators under private contracts. Some have long-term deals; some depend largely on the spot market. There have been shakeouts in the past in which prices surged suddenly, causing some firms to go broke. Utility commission spokesman Mr. Hadley said the commission knows rates "will be higher, but no one knows how high they will go."
Yes, it's legal. When a REP goes out of business, ERCOT assigns their customers to another company. I believe customers are assigned to maintain the current market share mix, so Reliant gets more than, say, Gexa. The receiving company can dictate the rate at which they come on and it is often punitive. Last time this was an issue was a couple of years ago and Gexa had charged 18 cents for those clients. We make some short-term easy money that way. However, I think our POLR rate is now competitive in an attempt to actually keep those people as customers. Apparently, Reliant has not taken that perspective. Expect more companies to go out of business and everyone's rates to go up this summer as energy prices increase. There's companies now that are asking over 20 cents. Essentially, if you are a customer of a small provider that is not a subsidiary of a big company, watch diligently for a bankruptcy.
I'm with Stream Energy. I haven't heard anything about them losing money, so I don't think that they are in danger of going bankrupt. http://austin.bizjournals.com/austin/stories/2008/02/04/story11.html I'm thinking about locking in a fixed rate for the next 2 years.
I cannot believe this is legal. How can they do that without giving customers the right to choose who their new electric company is? What a joke.
What Jugdish said...however, you should be able to choose another provider and I would suggest you do that asap...
I know it doesn't sound fair, but when you have smaller, less experienced (and likely, poorly hedged) providers going out of business, the PUC & ERCOT have guidelines in place to assign the "orphaned" customers to someone. Different suppliers bid to take a certain number of the "orphaned" customers and will have a default POLR rate that the customers are assigned when they are switched over. If the regulatory bodies just let people choose instead of assigning them to a default provider, you would see a large number of people going months without picking a new supplier and not getting billed for their consumption. To prevent that, you would have to institute some sort of cut-off date after which the utility would have to disconnect them (never very popular during Summer in Texas). The artificially higher POLR rates are high by design -- as an incentive for you to shop for either an alternate supplier or to pick a term product from the POLR provider. They're month-to-month rates, so it's not like you're bound to them. POLR is definitely the lesser of two evils there as it forces people to make a choice without disrupting service. The idea of letting people have whatever the rate was that they contracted under with the previous supplier isn't really realistic. If that previous supplier wasn't hedged properly and wasn't charging enough to allow it to continue supplying customers, holding that rate over with a new supplier just makes no sense (particularly when you take into account the fact that procuring power now is considerably more expensive than it was back in October, for example).
Generally agree, but would point out that without POLR, customers would likely be instantly cut off when their REP went out of business. Neither the TDSPs nor the REP-to-be would want anything to do with the market and/or credit risk of a customer that has not chosen a REP.
I am assuming that you work for Gexa. If so, I am further assuming that Gexa is not in any danger of going away. Am I right? Refgal switched to Gexa a couple of weeks ago because Gexa gave by FAR the best rate (and OnePass miles to boot).
My issue is that there is no notification of this. Had my roommate not come across an article about National Power going bankrupt, we would have had no idea that our rates had more than doubled. Luckily he got it down to 21 for this month and 13.9 after that for four months.
I'd actually posted something about NPC's struggles a few weeks ago in the last "electricity thread". It was all over the news in both Houston and Dallas. You may have been on "hiatus" during that time... http://bbs.clutchfans.net/showpost.php?p=3688905&postcount=34 By the way, per the Texas PUC, it's always the new provider that is supposed to be sending notification. If you haven't received something yet from the POLR REP, you probably will be soon. Considering what else is out ther enow, $.139 isn't bad though. http://www.puc.state.tx.us/files/POLR_052908.pdf
So I get this notice from Spark saying that my contract is up later this month and to renew at a lower rate. Check this out, the cost on the webiste is .1640 per kwh and they offered me a discount of .0002 cents per kwh. That's right b****es. I'm feeling really good on this new deal of .1638 per kwh. Hell, I'm afraid to delay another day or else it may shoot up to .3000. Absolutely ridiculous. Since I didn't see the difference with others worth the trouble, I decided to stay. Plus Spark has a nice autopay bank draft option that makes it easy for me. I'm sure not all of them do.
So how are these companies NOT going bankrupt when they are offering these long term contracts (with lower fixed rates) to their customers while the market is so volatile?
As long as they hedge their transaction, they should be fine..My guess a lot of the REP's didn't as they have to guess their load...This is the first of many to go bankrupt...
A little bump to this. Two more providers going under (Etricity and Riverway Power to join National Power Company and PreBuy Electric): http://www.star-telegram.com/804/story/684636.html Another Texas power company facing closure By R.A. DYERrdyer@star-telegram.com The fourth Texas electric company in two weeks is showing signs of failing, although for the moment its customers won't get involuntarily dumped to a high-cost default provider, officials said Thursday. The company, Houston-based Riverway Power, has filed for bankruptcy, according to the Public Utility Commission. Operators of the Texas power grid were preparing to shift its customers to the high-cost default electric company, but then stopped that process after Riverway came under the court’s bankruptcy protection. A spokesman for the company could not be immediately reached. PUC spokesman Terry Hadley noted that Riverway is the same company that the PUC earlier sanctioned for allegedly reneging on fixed-rate deals with its customers. In the past two weeks, three other companies have failed to meet financial obligations to the grid operator and so have had their customers switched to high-cost default providers. Those companies include Bridgeport-based PreBuy Electric, Houston-based National Power and Denton-based Hwy 3 MHP, which also does business as Etricity. As a result, more than 35,000 customers have been switched to high-cost default providers or other electric companies. At least 9,000 of those customers were from North Texas. Some customers who get switched to the high-cost default provider could see their costs double. Also in recent days, prices on the wholesale electricity market have spiked to some of the highest levels in memory. Some analysts are blaming those spikes and skyrocketing wholesale prices for the recent tumult in the retail electric market. The operator of the Texas power grid, the Electric Reliability Council of Texas, held a technical meeting Thursday to consider engineering changes to address the price spikes.
