A retail electricity provider in Texas has been fined $81,750 for disconnecting customers without proper notice.
The Public Utilities Commission of Texas said MI Texas, the company that operates Abacus Energy, executed disconnections on 109 occasions without informing customers about outstanding debts between Oct. 1, 2022, and June 30, 2023.
MI Texas cooperated with the investigation, the PUCT said, and “acknowledged” the findings. In addition to the fine, MI Texas updated its procedures, which now include processes to call delinquent customers regarding their debt.
“The violations are serious in nature because they create a potential hazard to the health, safety, and economic welfare of the public,” the PUCT wrote in its order. “By disconnecting customers without proper notice, MI Texas could be exposing the customer to extreme temperature, loss of refrigerated items, and increased safety risks.”
The PUCT closely monitors customer disconnections.
In June, the regulator levied $300,000 in penalties on retail electricity providers for attempting to disconnect customers during extreme weather events and overcharging.
Fort Worth-based retail electricity provider Young Energy, which operates Payless Power, was found to have violated customer safeguards related to disconnection of service during extreme weather events. The company offers “flexible prepaid and traditional electric plans” through partnerships with Onor, CenterPoint Energy, AEP Central, and AEP North.
Young Energy disconnected 1,819 customers located in counties affected by extreme weather emergencies for non-payment between Nov. 1, 2020, and Sept. 1, 2022, according to Public Utility Commission of Texas documents. Extreme weather emergencies were declared for 60 days in counties served by Young Energy.
PUCT did not specify when individual disconnections occurred. However, the period outlined by the commission includes Winter Storm Uri in 2021 as well as the summer of 2022. Dallas-Fort Worth recorded 47 days over 100 degrees in all of 2022.
PUCT said the disconnection attempts occurred during The Dallas-Fort Worth area recorded 8 days with 47 days with high temperatures surpassing 100 degrees in 2022.
While all of the disconnections were to be completed during the extreme weather events, Young Energy’s transmission and distribution utility partners did not carry out the authorizations.
A bad rap
Retail electricity providers are facing pressure outside of Texas, too.
A bill approved by the Massachusetts Senate would ban retail electricity providers, which have cost customers in the commonwealth hundreds of millions in recent years.
Senate Bill 2738, which is now being considered in the state house, would block any “supplier, energy marketer or energy broker” from executing new contracts for generation services with residential retail customers beginning in 2025. Municipal load aggregation programs would be exempt from the law.
The bill was filed after the Massachusetts attorney general found customers of retail electricity providers paid $577 million more than traditional utility customers in the last eight years. The commonwealth’s top law enforcement official labeled Massachusetts’ competitive electric supply industry “predatory and broken,” while calling on the legislature to protect customers.
“The harms caused by these companies significantly outweigh any benefits to consumers,” Attorney General Andrea Campbell said.
During the most recent study period, July 2022–June 2023, utility basic service rates in some areas of Massachusetts were more than double the highest-ever basic service rate due to unprecedented volatility in the energy markets, the attorney general said. Customers who signed up with an electric supplier realized only $30.4 million in net savings for the year, a number which Campbell said “is dwarfed by the significant net losses experienced in every other year studied.” Individual low-income customers experienced net losses of $82.2 million over that period.
What is a retail electricity provider?
In 2021, 26% of eligible U.S. customers participated in their state’s retail choice program, or 13.2 million U.S. residential electric customers, according to the EIA. The participation rate in U.S. residential retail choice programs remained relatively unchanged from 2019 to 2021, following several years of modest growth.
In states with retail electricity choice programs, customers can choose to purchase their electricity directly from a retail energy supplier rather than from their local utility. Their local utility then delivers the purchased electricity to their home through the traditional power grid system. Retail choice programs differ from traditional utility services, where the utility both procures electricity for the customer (either by generating the electricity itself or by purchasing it from a supplier) and delivers it to the customer’s home.
Both Illinois and Connecticut have seen large drops in retail choice participation rates over time. In Illinois, the share of customers opting for retail choice peaked in 2014 at 57%. That share had fallen to 31% in 2021. In Connecticut, retail choice participation dropped from a peak of 42% in 2013 to 24% in 2021.
