The Texas electricity market has been abuzz the past few weeks after a series of articles have been released speculating about the possibilities of Energy Future Holdings separating their competitive assets (TXU and Luminent, respectively) from Oncor in preparation of possible bankruptcy. There have been several articles in the Dallas Morning News, which you can read here, here, here and here, as well as an article here in Bloomberg. Right now everything being written is just speculation, Continue reading “Potential TXU Bankruptcy: What it Means for Texas Electricity Customers” »
Recharge Texas, a group that I’ve often disagreed with in the past, released a new report discussing how PUC complaints have declined year over year from their peak in 2010. Of course, TCAP was also quick to point out that Continue reading “Electricity Complaints Continue to Decline” »
As I wrote about yesterday, JD Power & Associates released their 2012 survey of Customer Satisfaction for the Texas electricity market. I’ve already written about the specific results and the electricity providers that excelled in the survey. Today I want to take a look at another segment of information that was released in the survey:
Customers in Texas who are able to choose their electric provider are increasingly more satisfied with their provider than are those who do not have a choice, according to the J.D. Power and Associates 2012 Texas Residential Retail Electric Provider Customer Satisfaction StudySM
Since Texas deregulated in 2002, the market has had it’s ups and downs. It took a couple years for the pricing to get in stride, and it also took a few years for most people to come to understand the process of shopping for and selecting new electricity providers, as well as the difference in responsibilities between companies like Reliant and Centerpoint, or TXU and Oncor. Lots of people got frustrated, and lots of people in places like Austin and San Antonio pointed fingers and said deregulated electricity was a failure.
However, in the past 5-6 years, the market has settled down. Prices hit all-time lows with the cost of natural gas, and right now they are actually some of the lowest prices in the country while Austin is on it’s way to having one of the highest electricity rates in the state of Texas. Additionally, some reports from biased groups like Recharge Texas have interpreted that rising customer complaints after deregulation are a sign of overall customer dissatisfaction, as opposed to customers simply participating in the marketplace. Well, this recent JD Power Survey seems to put that to rest once and for all:
Overall satisfaction among residential customers of electric retailers in Texas is 678 (on a 1,000-point scale), an increase of 44 points from 2010. This is the highest level since the study was first published in 2008. Moreover, this is the first time satisfaction among customers with a retail choice of electric providers exceeds both the Texas and U.S. national averages for all factors measured in the study. Among Texas customers with regulated residential electric service, satisfaction is 646. Regionally, satisfaction among customers in the Metropolitan Dallas/Fort Worth area is 677, compared with 681 among those in the Houston area, three points higher than the statewide average.
So Texas has the highest customer satisfaction when compared to any other state in the country, particularly and including regulated states. Additionally, when comparing the customer satisfaction between the regulated and deregulated areas of Texas, the average customer satisfaction is overwhelmingly better in the deregulated areas. Despite a bunch of naysayers about deregulated electricity, and customers paying higher prices, and being dissatisfied with a confusing process, it looks like the market actually is working and customers are happier.
Here’s some other interesting facts and snippets from the JD Power Survey:
“Many electric retailers in Texas are considering how to better serve their customers when they are contacted,” said Andrew Heath, senior director of the energy and utility practice at J.D. Power and Associates. “The large improvements show that electric retailers are putting practices in place that improve satisfaction, which helps retain customers.”
Satisfaction is 218 points higher when customers’ questions or problems are resolved on the first call, compared with when their questions or problems require two or more calls for resolution (799 vs. 581, respectively). Similarly, online customer service interactions echo the need for quick resolution, as satisfaction with customer service is 800 among customers whose questions or problems are resolved on their first visit to the website, compared with 644 when problem resolution requires two or more visits.
“Customers do not want to spend much time getting an answer or fixing a problem with their bill or service,” said Heath. “The dramatic increase in satisfaction for first-contact resolution is a clear indicator that Texas electric companies should strive to quickly resolve issues or questions.”
Among customers who are aware of their retailer electric provider’s corporate citizenship efforts–such as supporting local organizations or volunteering in the community–satisfaction averages more than 60 points higher than among those who are not aware of such efforts.
So it looks like the innovation and focus on customer service that was expected to result from a deregulated market have taken place. Companies are focusing on customers, as well as innovating in the online space. Some companies are even making a larger push at civic involvement and their customers are aware and pleased at this fact. The rates in the deregulated areas of Texas are among the cheapest in the entire nation. It looks like the deregulated electricity in Texas is a success. Or at the very least, the customers buying electricity certainly seem to believe it’s a success.
Late last week it was announced that Champion Energy won the 2012 JD Power & Associates survey for customer satisfaction. This marks the third consecutive ear that Champion Energy has won the award, which is an outstanding achievement and really demonstrates their commitment to customer service and satisfaction. Champion Energy is the first electricity provider to win the award for three consecutive years.
Champion Energy got perfect scores on 3 of the 4 grading criteria that JD Power measured, which are Billing & Payment, Price, Communications, and Customer Service. Their total score was 756 out of a possible 800, improving on their 2011 score of 745. The Texas electricity industry average score was 678, which Champion exceeded by 78 points. Again, congratulations to Champion Energy.
Also performing well was relative market newcomer, Bounce Energy, which was founded in 2008. Bounce Energy was the only other Texas electricity provider to score the top 5 point ranking with a total score was 745. Bounce’s performance is particularly impressive when you consider that they are the youngest company on the survey to be included. Additionally, this was just their second year to be included in the survey at all, finishing last year with 681 points. So Bounce Energy also deserves a well-deserved congratulations for moving into a very strong 2nd place finish in just their second year in the JD Power survey.
StarTex Power had another great showing, finishing third with a total of 729 points. Also of interest to me was that both market incumbents and big name providers Reliant Energy and TXU Energy finished with marks below the industry average with scores 669 and 663, respectively.
The survey results weren’t the only things I found interesting in the press release, which also spoke about the general satisfaction with Texas electricity customers when compared to consumer satisfaction in regulated markets without choice. I’ll take a closer look at that this afternoon in a separate article. Full results below.
Since I released my article questioning strange behavior in the ERCOT electricity market on June 29th I’ve been receiving a lot of attention. I had a very long follow-up call with the Independent Market Monitor (IMM), Dan Jones, and some of his associates. Additionally I was contacted by a reporter at Platts who wanted my comments on some of the responses my article had elicited from the Texas electricity and energy community. And of course, yesterday Potomac Economics, the company that serves as/with Dan Jones as the Independent Market Monitor, released their formal response to my blog posting. That report was subsequently picked up by the Houston Chronicle and Fuel Fix.
I have a couple minor issues with the report that was received and some of the subsequent articles written, but for the most part it was great to get detailed answers to some of the questions I posed in my original article.
One thing I did find amusing was that the subsequent article in the Chronicle refers to me as an anonymous blogger. I’m not sure if that was an effort to malign my credibility or not, and perhaps I’m misunderstanding some nuance here, but I suppose I didn’t really consider myself that anonymous. I freely gave Dan Jones my name and position when we first spoke, and I followed up his request for my contact information when he inquired through Texas Electricity Ratings so we could have a follow up discussion. The reporter from Platts had no difficulty finding my name contact information, either. The Chronicle never inquired my actual name, or even could be bothered with a simple Google search, apparently, so I suppose that makes me anonymous in their eyes. I suppose I’m glad that other people didn’t seem so quick to dismiss my questions simply because they thought I was “anonymous.”
On a more serious note, after speaking with Dan and his colleagues, it appears that I was absolutely mistaken in my article when I said ERCOT might have violated protocol in their late notices for the Day Ahead Market (DAM) report and a lack of notice. They were, by all accounts, 100% in line with their protocols and requirements for sending out notice that the DAM report would be late, albeit extremely late. So I was absolutely mistaken in that regard and will own up to it. ERCOT got it right, and I got it wrong.
Additionally, I want to say that when all of the reports have come back as resoundingly as they have stating that no one believes there was any manipulation, I believe them. I’m surprised at just how quickly they came to that confident a determination and got a definitive report back stating with certainty they didn’t feel there was any manipulation, but then again that is what these folks do for a living and everyone seems certain there was no manipulation. And their explanations make sense. So that is great news.
Now that being said, while I was reading through the report, there is also some other good news. Specifically this line that begins at the bottom of page 1 of the IMM’s report:
one inquiry on June 28, 2012 was followed with a public posting on an online “blog” on June 29, 2012, which generated additional interest and questions from market participants, interested stakeholders, and elected and appointed officials.
I consider this to be great news. First, the fact that I wasn’t the only person asking questions, including other “stakeholders” and political officials indicates to me that there are people from all different circles monitoring how the Texas electricity market behaves. Hopefully this kind of attention from lots of different and unrelated parties act as an additional barrier for any group that might ever consider any kind of market manipulation.
Additionally, whether the response by the IMM was a direct response to my article or not, or if it was just an easy illustration that the IMM used to answer questions, it doesn’t change the fact that the article I wrote was cited heavily in his report to ERCOT. It makes me feel better that people like myself with questions can voice them in a manner that will promote honest, detailed responses and conversation from the people responsible for monitoring and policing the Texas electricity grid and marketplace. Its vital people trust the marketplace for deregulated electricity to work, not just in Texas, but everywhere.
I lived in an apartment for years that had a smart meter, and despite the fact that I write about them regularly on this website, I never really paid much attention to them myself. However, I recently moved into a home with a lot more electricity usage. On top of that, I saw this quote in an article in the Fort Worth Star-Telegram last week, which I found really fascinating:
I’ve written before about the potential crisis in Texas due to the lack of new generation plants. Basically, not many new energy generation plants are being built, or even planned, at a time when Texas’s population continues to explode and our electricity needs along with it. The problem is that because of the deregulated electricity system, all new plants must be built by private investors instead of by taxing customers or raising electric rates. And right now the low cost of natural gas and the lack of guaranteed profits have investors leery of risking the construction of new plants in Texas.
A commonly referenced solution Continue reading “ERCOT Price Market Cap Changes Appear Politically Motivated” »
I get tons of customer reviews through Texas Electricity Ratings, and one of the most consistent issues I see are negative reviews based on misconceptions, or in some cases, a lack of understanding of how the deregulated electricity market works. Since a big part of what I do is to try and help educate people on how the market works I’m going to paste some reviews that I didn’t let through the website for various reasons, which I will explain at length below.
These first two reviews go together:
I just wanted to make a quick post alerting everyone that I’ve re-calculated the rankings on my website, Texas Electricity Ratings. The rankings are compiled using a number of independent sources including current electric rates, the most recent PUC complaint statistics, Better Business Bureau rankings, the customer reviews submitted through the website, and more. Continue reading “Texas Electricity Ratings Updates Rankings on 2/22/12” »
Anyone who visits my blog regularly has probably seen that I’ve been talking a lot about the Texas Coalition for Affordable Power (TCAP) lately. TCAP recently published their “history” of deregulated electricity in the state of Texas, and there are several things about their self-proclaimed history I find questionable, which I’ve documented at great length in the four posts below: Continue reading “Who is The Texas Coalition for Affordable Power (TCAP)?” »