TXU Energy, the unregulated arm of Dallas-based TXU Corp., last month notified 185,000 of its Texas electricity customers that increases in natural-gas prices would require the company to adjust rates. But in a new rate-setting tactic for the electric-utilities industry, TXU Energy also plans to impose a bigger rate increase for its customers with the lowest credit scores based on numeric rankings of credit-worthiness that take into account a customer’s history of paying electricity, telephone and cable bills.
Predictably, consumer advocates are not pleased. “If they get away with this, others will follow,” said Randy Chapman, executive director of the Texas Legal Services Center, a legal-aid program that helped uncover TXU’s credit-scoring practice, which was reported by the Dallas Morning News. Another state-funded consumer advocate in Texas is reportedly preparing to file a formal complaint with the Texas Public Utility Commission asking it to issue an emergency order preventing TXU, which is both the biggest utility and biggest competitive supplier in the state, from implementing the rate changes.
Imagine the audacity of a company trying to take away the right of people who do not pay their bills timely to have people who do subsidize the cost of their tardiness.
The Texas electricity market was deregulated in 2002, allowing customers to jump from one provider to another where available. The new TXU pricing arrangement doesn’t affect customers that get service from TXU Corp. in its traditional territory in the Dallas-Fort Worth area. Rates there continue to be regulated by the state during the transition from a fully regulated to a deregulated market.
Instead, the credit scoring has been applied to TXU Energy customers in portions of the state where TXU is seeking new customers. TXU Energy lured many of those customers away from utilities with the inducement of discounts.
The insurance industry has for years used credit scores as a tool to predict losses and help set premiums. A study prepared last year for the state of Texas by the Bureau of Business Research at the University of Texas in Austin found a correlation between insurance claims and low credit scores. Credit tools have been used by the electric industry to set deposits but haven’t been used to set actual rates. Traditionally, rates were based on the cost of furnishing service to broad customer classes, such as residential ratepayers.
However, under the federal Fair Credit Reporting Act, companies that use credit information as a basis of adverse decisions often are required to disclose that fact to consumers. It does not appear that TXU has complied with the Act, at least yet.
Many states that have deregulated their retail electricity markets still require incumbent utilities to offer rates that serve as a benchmark for prices offered by competing suppliers. But those government-mandated rates expire in Texas in 2007 for residential customers.
Under the TXU program, electricity rates will be raised for 185,000 customers, based on higher gas prices. But they will be raised most sharply for roughly 55,000 residential and small-business customers with poor credit scores. That’s about 30% of the accounts that TXU Energy now serves in competition with incumbent utilities.
Stay tuned as this football begins to be tossed around the political playing field.
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TXU and credit scoring
Slacktivist is peeved by this Reuters story in which utility company TXU plans on linking credit scores to energy bills….
I don’t know if this is the place to put such comment, but I am a customer of TXU in Houston, Texas. I am trying to get away from them, because of how they have been treating me as a customer, but cannot seem to unless I have a $1000 to give them. The story is that my husband and I moved to Houston last August.After a month we found out that our neighbor, who had had his electricity cut off, was using our electricity. Our next bill jumped almost $300. When I called TXU, they didn’t listen to anything I had to say, and only allowed me to be on a special plan to pay them back. I had no recourse, and soon faced too big of a bill to keep up. I spent hours and hours with agents who never knew anything about my situation, who would keep asking me for more and more payments, under the threat of being cut off. Then they would not send me a bill for two months. Then all of a suddent, I would get a letter that warned me of a new cut off, and asking for the wrong amount I had to pay. I called them every time, trying to clear things up, and trying to get a real bill, of what I really owed. The last draw happened about a month ago, when I received a new letter telling me that they were going to cut off my electricity unless I payed $270. I called, and after talking to several agents, who didn’t know anything about anything (they couldn’t even find my account number), I talked to a supervisor, who told me that all I really owed was $74 and a few cents. I specifically asked him if that was all. He said that was all I had left to pay, that I would be alright, and that I would now receive a regular bill. I made the payment right away, and just waited for my new bill. A couple of weeks ago, my husband, who has his own business at home, called me at work, and told me that our electricity was shut off. I could not believe it. I called TXU, and they told us that we owed close to $500!! not only that, but that if we wanted our electricity back on, we needed to pay an extra $300 for a deposit. When I asked them why, they said that it was because we hadn’t payed on time!!!!! Not only was it very difficult for us to pay the $500, but now we had another $300, which supposedly will appear on our next bill. I am now trying to find a way to eliminate this deposit of $300, but no one will talk to me at TXU. We had no choice but to pay, they had cut us off, without any warnings what so ever, and after lying to me about how much I really owed. And it wasn’t that I missunderstood…I know that they messed up. Because we were put in this situation, we are behind all of our other bills, which in turn will give us bad credit anywhere. We have to pay $800 for a $196!!!!!!! I wish I could afford a layer, because I know the company is really screwing us little people…but I can’t. All I can do is try to find more people who will listen to me. Maybe all of us can stop them. I understand that there are people in this society who take advantage of certain situations, or they do illegal things, like my neighbors,. But there are honest people, who work hard everyday, and who make just enough to pay their bills. When such an incident happens, and companies like TXU impose such new regulations on their customers, it makes it even worse, and puts people like us in very difficult financial situations, which will take months to clear up. I have a statement though…the article says that the company is going to impose these new regulations, but it looks like they haven’t waited for any one to get the go ahead. That means there are probably a lot of people in my situation, who have no recourse, because if they don’t pay, they don’t have electricity. TXU even told me that another company would not accept me as a new customers, even if I had payed off all of my bill, because my electricity has to be on!!!! That was after I asked them how much it wouldcosts me to pay for everything I owed them, and change provider…think about this for a minute. This is the most ridiculous thing I have ever heard from a public company. I feel cheated, and abused. These people are taking advantage of people like us, who don’t have much money….and I am an educated person…I wonder how they treat those who don’t even know any better, and cannot fight back!!
lower monthly cost
I have had a billing issue with TXU as well- and I am also getting no satisfaction with the people on the phone (they just want me to pay the ridiculous bill!!
Here is the letter I have sent to TXU
TXU Energy
Re: Account 5486386998-3
February 15, 2006
To Whom It May Concern:
I am writing this letter because I believe there has been an error with my electric bill.
I live at XXX Houston 77005-approximately 1200 sq. ft. My average electric bill for this unit was $150 (May 2004-November 2005). The bill for the identical upstairs unit (B) never exceeds $100. My bill for 01/06 was $747.73! I asked for a confirmation of the meter reading (order 115684-56501). According to TXU, the meter reading was correct. My bill for 02/06 was $390. I have asked for the meter to be checked for the accuracy of measurements (work order 1-1592799-08). The meter was last checked 01/01. My energy needs have not changed appreciably during these last two month- in fact they are probable on the low side of my average usage.
Therefore, I actively dispute these bills and filed a grievance with the Texas Energy Commission (01/06). I ask that you check the meter and keep me informed about these issues.
I have left XXX and now live at YYY, Houston 77030. Due to these billing issues, I have chosen another energy provider.
For January and February I have submitted payments of $250 dollars for each month. This is above my average monthly payments. I request that no late fees be added to my bill until this issue is resolved.
Please keep me informed.
Sincerely,
(address for future correspondence given to TXU)
I’ve lived in my home in North Richland Hills, Tx. for almost five years now, about two years ago my ele. bill with TXU starting getting to over $250.00 I live in a 1800.00 sq.ft house, this was a bit higher than I was use to paying and decided it was time to replace my old central heat and air unit with a $7000.00 unit. I was told it would reduce my bill considerable, to my suprise my bill kept going up month after month. This winter I had two inches of insulation added to my attic, I had double paned storm windows put in and now my bill is over $485.00 per month. I have requested several times the meter be checked, but they tell me I will need to be home to check it, and they never show up. I complained because I have no children in my home but several of my neighbors do and their bills are staying about $250.00. The not so nice people who take my calls tell me that I can’t compare my bill with the neighbors, why can’t I we all live in the same size houses, their theromastat are set at 70 while mine is set at 79,they have done nothing to improve their engery use but my bill keeps going up. What can I do, I have to have the ele. and with the meter being the only major thing I haven’t replaced it must be the problem. I’m sending letters to everyone I can about this problem, I’m sick now and can’t afford to pay this kind of bill each month. Even if I weren’t sick this is unfair they least they could do is replace the meter and then if I owe the bill I owe the bill.
Thanks,for letting me vent.
Robbie Birge