When Henry Roberts of Fort Worth was shopping for electricity last year, he was happy to switch to Ambit Energy, which offered him a two-year fixed rate of 9.7 cents.
Roberts wasn't as happy when he opened this month's bill and found an extra $44.92 added, which the company called a "Power Cost Recovery Factor." The charge in effect raised his average price to 11.6 cents per kilowatt-hour."It does irritate the fool out of me," said Roberts, who said he has complained to the company and the Public Utility Commission of Texas.He signed a fixed-rate contract, and from his perspective, "a deal is a deal," he added.On Thursday evening, Robert said Ambit called him to say it would waive the fee.Earlier, Ambit said it was only trying to recoup money it spent buying power for its customers, electricity that was unusually expensive at the time because of PUC actions that ultimately raised the ceiling for the price of wholesale power in the state. After several months of public debate, the PUC in April increased by 50 percent the maximum price that generators could charge for supplying electricity to the state's power grid.On Thursday, the PUC voted to raise the cap yet again.Representatives of the PUC said this week that they're not sure they will accept Ambit's argument that the agency's actions constitute enough of a change to allow the company to pass on extra costs to fixed-rate customers.PUC spokesman Terry Hadley said the agency has been in touch with the company, and "some of our staff members plan to meet with Ambit representatives."As far as the agency is aware, Ambit is the only retail electric provider that has sought to pass along added costs to fixed-rate customers, Hadley said.Chris Chambless, chief marketing officer for Dallas-based Ambit, told the Star-Telegram that the company will include the charge on three monthly bills for its fixed-rate customers. The second and third charges "will decline pretty dramatically," he said.Ambit's case illustrates some of the complexities of Texas' deregulated electricity market. Rather than passing along costs with an allowed profit, as with a regulated utility, electricity generators and retailers buy and sell power at market prices, which can fluctuate dramatically.According to Chambless, Ambit was locking in power in early 2012 for the peak summer months, when demand grows with rising temperatures and prices sometimes follow. But, he said, this year after the "PUC started discussing increasing the wholesale cap, Ambit saw summer prices take a jump.For example, electricity that might have cost $50 a megawatt-hour, which amounts to 5 cents a kilowatt-hour, rose to $200 a megawatt-hour, or 20 cents a kilowatt-hour, he said. Even that higher price, though, was much less than the state's previous wholesale cap of $3,000 a megawatt-hour, not to mention the new $4,500 cap the PUC voted to allow starting Aug. 1."Rather than rolling the dice to see what happened in the balancing market, we decided to hedge, and we paid a premium for it," Chambless said.As it turned out, power prices this summer did not spike, and Ambit would have been better off simply buying power in the spot market.PUC Commissioner Ken Anderson warned during debate over raising the wholesale cap that such a move might constitute a change in regulation that could allow providers to change the terms of fixed-rate contracts."Some of the [retail providers] were concerned that they had already locked in their hedges for the summer" and those hedges might prove inadequate, Anderson told the Star-Telegram this week.Hedging is a real issue, he said, but added, "If a [retail electric provider] thinks they can impose a cost like that merely because we acted, they are mistaken."Anderson said the facts of Ambit's case will have to be examined, but he added that "the REP will have to prove they incurred the extra cost they are trying to pass along."Chambless said Ambit has been in touch with the PUC and will open its books to regulators."We wouldn't have done this otherwise," he said of the added fee. He said the average fee to Ambit's fixed-rate customers, which make up at least 80 percent of its more than 400,000 customers, was $30. While the fee is included on current bills, it is based on a customer's power consumption during August, he said.Paul Fershtand, vice president of Live Energy, a Colleyville consultant to power users, said power prices jumped early in the year, but he noted that no other provider has sought a similar charge."They hedged at a terribly high cost," and if wholesale prices had spiked, as happened in 2008, it would have been a good move, Fershtand said. "But the market settled out when we didn't get hot enough."It's likely that Ambit's case will revolve around whether the PUC's discussion of a higher cap was "a change in law, or just a slight market adjustment," he said.Three other providers, which did not want to be identified, said they are constantly buying power based on new customers they sign up, reducing their risk of being be caught in a price run-up. All said they are not considering passing along extra costs to customers on fixed-rate contracts.Jim Fuquay, 817-390-7552Twitter: @jimfuquayHave more to add? News tip? Tell us
