So I recently saw an article that a group called Recharge Texas released through Business Wire discussing some truly wrongheaded ideas. Recharge Texas claims to be the state’s “premier website for energy consumers.” I wonder if just maybe that title was something they gave to themselves. Without further ado, let’s jump right in and examine this foolishness.
Electricity complaints have skyrocketed under the Texas electric deregulation law — from fewer than 2,100 received each year by the state’s Public Utility Commission to an average of more than 12,000 under deregulation, according to an analysis by RechargeTexas.com.
Texans have lodged more than 800 percent more electricity complaints on an annual basis after retail deregulation than they did before deregulation, the analysis shows.
Jay Doegey, TCAP president, said the colossal jump in complaints reflects continued frustration with the deregulated electricity market in Texas.
Ok, two of the statements I’ve listed above are (arguably) facts. One of them is entirely an opinion based on a conclusion drawn by someone with no real background for consideration as either a statistician or expert. Can you guess which one is the opinion? That’s right, it’s the statement made by Jay Doegey of the TCAP (Texas Coalition for Affordable Power, which runs Recharge Texas). I’d be curious to know if Mr. Doegey took into account that before deregulation, the ability for customers to lodge complaints online didn’t exist, as well as the fact that the internet was not nearly as robust and ever-present as it is today. Do you think that perhaps the fact that people do everything online, and can find phone numbers in a few seconds instead of thumbing through a phone book to find a number to complain to makes a difference in how many people actively participate in the marketplace? Additionally, I wonder if he considered whether or not sites like Angie’s List, Yelp, Facebook, Twitter and even my own Texas Electricity Ratings have helped reinforce to people more than ever that one voice does make a difference in a marketplace? Lets face it, the shift in culture in the past 10 years in how people behave can be measured in light years, not just leaps or bounds. In fact, 10 years ago I didn’t have a cell phone with internet access. Now they all do. And within 5 minutes I can go from checking my electricity bill online, to google searching the phone number to the PUC, to calling their complaint line if I so choose — all from my cell phone. Does anyone think this hasn’t played a huge part in the increase in complaints for electricity companies?
Something else that absolutely should be considered is that in the past 10 years the state of Texas has been part of what can only be called explosive population growth. In 2002, the population of Texas was 21 million and change. In 2011 it’s projected to be around 26 million people. That’s a population growth of almost 20% in under 10 years. Am I the only person that thinks our state increasing its population between 15-20% might also play a part in a massive increase in electricity complaints? I hardly think it’s inconceivable that mistakes could have been made and those people are much more likely to have to get on the phone to lodge complaints just during the process of figuring out how a deregulated market works. Doegey overlooks the possibility of this situation again in the article when he references how high the spikes in complaints were initially following deregulation. Of course the number of complaints spiked. All of a sudden people were immersed in a new system that was confusing. What a shock the the road was a bit bumpy.
However, what gets absolutely no consideration in this article is that now people honestly had a REASON to complain. In a regulated market, what exactly is the incentive of calling in and complaining? It changes literally nothing. One certainly can’t complain and then move to another provider. And what motivation do they have to provide any better service to someone who lodges a complaint when that person LITERALLY has no other option except to continue to get their service from the provider with whom they’re currently displeased? Absolutely Nothing! In fact, an excellent case can be made that people would avoid complaining because of the fear they might receive WORSE service. Does it make sense for an employee to yell and scream at their boss and tell them how terrible they are at their job and expect no negative consequences? Absolutely not. That’s why people who are frustrated wait to tell their bosses that on their way out the door after finding a new job. Well, when Texas was regulated, there were no new “jobs”, and there were no doors to escape to when you were unsatisfied with your electricity service. It doesn’t appear that Recharge Texas considered that when they were looking at the numbers. If so, I’d love to see them show their work and quantify how this factored into their equations.
The greatest irony of this article is that the same thing that Doegey and Recharge Texas are claiming, that the increase in complaints is a sign of dissatisfaction, is completely backwards. The increase in complaints is a sign that the free market for electricity is WORKING! Complaints now have meaning because there IS electric choice, so now people are actually taking the time to rate their electricity providers while working the market to their advantage! This is exactly what the deregulated market was intended to do, and it’s actually happening. And by the same token, the electricity providers with the greatest number of complaints are far and away the former incumbents, Reliant and TXU, the electricity companies that we’d be saddled with if we were still regulated. It’s extremely easy to make an argument that the companies who have been the slowest to figure things out in terms of customer service and satisfaction are the large incumbent monopolies we had before deregulation. It should only be shocking to groups like Recharge Texas that more than 40% of all complaints on record at the PUC for 2011 come from 3 companies that used to be former incumbent electricity providers: Reliant Energy, TXU Energy, and Direct Energy. The presence of new companies actually gives customers an alternative to the biggest offenders in the marketplace. I wonder if Recharge Texas would consider alternatives to bad customer service to be detrimental to electricity service for Texans? It certainly seems that would be a strange stance for the “premier website for energy consumers” to take, however, they seem to have adopted it nonetheless.
Additionally, I question this report’s Math. According to this statement in the article:
During the entire period of deregulation, complaints against electric companies filed with the PUC have never dipped to below 7,700 per fiscal year.
If that’s true, then I suppose 2011 is special. Because through 6 months of this year, there are currently 2,210 customer complaints on record at the PUC’s website complaint summary. That means we’re on pace for about 4500 complaints this year, which certainly is less than 7700. It also makes their earlier statement that there are 800 percent more complaints on average seem more than a bit sensationalist. By their own math, Recharge Texas claims that there were 2062 complaints filed in 2001, the year before deregulation. If there are 4500 complaints this year, that comes to just more than twice as many complaints filed. I can easily chalk up to an active market which offers incentive for people sharing their experiences. A 150% increase is nowhere near an 800% increase in my book. Even if there were 12k reviews a year, that’s a 600% increase. Which is ALSO not an 800% increase. I wonder if the rest of their numbers are as sound as this math.
Are there any more absurdities in this article? Well, I’m glad you asked:
The plurality of complaints submitted to the PUC over the last two fiscal years relate to electricity bills. The relatively high number of billing complaints is unsurprising given that electric prices have increased in Texas by more than 40 percent since the adoption of the deregulation law. That’s a greater percentage increase than that registered nationwide. Likewise, average electricity prices in Texas are higher than prices in adjoining states.
I’d absolutely love to see the research they’re drawing from to put out this statement. Because I’m tempted to say it’s a flat out fabrication. According to research I did in an article many months back comparing Texas Electricity prices to the rest of the country, Texas flat out has the lowest rates of everyone. Certainly much cheaper than New Orleans, which I believe is located in a neighboring state. As for Oklahoma, Arkansas, and New Mexico, well none of those states are home to 4 of the 10 largest metropolitan areas in the entire country. In fact, if memory serves, none of those states are even home to 1 of the 10 largest metropolitan areas in the entire country, compared to Texas’s 4. I wonder if that has anything to do with the electricity rates, and that’s IF they’re cheaper, which I doubt. The fact of the matter is, the deregulated electricity rates at this point for Dallas and Houston are on par with San Antonio and Austin, the two major metropolitan areas that remained regulated. So if the rates all over Texas are all the same, both regulated and deregulated, then why is Recharge Texas so keen on painting deregulation as a problem in regards to billing in the quote above? Or customer service earlier in the article? Maybe the people in Austin and San Antonio aren’t filing that many complaints because they realize the futility of wasting their time complaining about billing and service with the only electricity provider in town.
One thing is certain, and that seems to be that Recharge Texas has an agenda against a deregulated electricity market. And digging around their website gave me some indications as to why that might be, but more on that in another article.