Texas Utility Panel Report Suggests Higher Fines Against Electric Providers
Dec 30, 2004 - Houston Chronicle Author(s): Purva Patel
The state's utility regulator wants lawmakers to let it increase fines fivefold to curb abuses by electricity retailers, according to a preliminary agency report.
The report, which has yet to be finalized, details the Public Utility Commission's legislative recommendations, such as requests for the authority to levy higher penalties and for more explicit responsibility over grid security.
High on the list: the authority to fine companies up to $25,000 per violation.
Current law caps fines at $5,000 for violations such as slamming, switching providers on customers without their knowledge, and cramming, putting misleading charges on customer bills. The law also prevents the commission from assessing administrative penalties if a company fixes problems within 30 days.
Despite receiving more than 50,000 complaints in the last two fiscal years, the agency has settled eight notices of violation and levied $1.5 million in fines since January 2003, most of which came from two companies, according to the report.
The $5,000 cap and 30-day grace period aren't enough to deter electric companies from committing violations and even provide an incentive for companies to violate state rules because they know they can "remedy the violation without penalty," according to the report.
The proposal mirrors a bill state that Rep. Sylvester Turner, D- Houston, filed during the last Legislature. It did not pass.
"I wholeheartedly support that," Turner said. "Without it, you will still have companies that are slamming or cramming people in the system."
The commission also asked for authority to require companies that violate rules to disgorge any ill-gotten gains.
One request, however, drew concern from Turner.
During the last session, lawmakers tapped the System Benefit Fund, which was used to help low-income consumers pay their electric bills, to help balance the sate budget.
The commission wants authority to change the state-mandated 10 percent discount for low-income consumers if funding runs low.
"I am filing a bill to restore the fund as it was envisioned, that is to make sure the funds that are derived in the System Benefit Fund can't be swept into general appropriations and that the discount remains at a minimum of 10 percent and goes up to 20 percent," Turner said.
He also wants to reinstitute funds, for at least another year and a half, for educational purposes and to help consumers understand the new market.
Consumer advocates would also like to see additional changes.
The PUC should have the power to request rate cuts if natural gas prices come down, said Randy Chapman, executive director of the Texas Legal Services Center.
"That's probably got to be at the top of the list for consumer groups," he said. "Otherwise when gas prices come down, companies will just be allowed to keep charging the higher rates."
The industry supports the PUC's recommendations and supports restoring the System Benefit Fund, said John Fainter, president of the Association of Electric Companies of Texas.
But allowing the PUC to request rate reductions would stymie competition, he said.
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