First Choice Power calls for delay in Texas market opening

Citing numerous problems, Texas electricity retailer First Choice Power Inc. Thursday called for a delay of the January 2002 opening of the market, if certain milestones aren’t achieved.

First Choice said serious deficiencies with customer billing, switching, inaccurate wholesale bills for power, and services from the Texas independent system operator have to be corrected before the market opens. The marketer asked for a delay until the success rate in these areas are maintained “at a 98% to 100% level for at least 60 days,” or an entire cycle through the settlement process is completed.

“These problems are of such magnitude that they would vastly undermine any benefits of competition if they were to occur in a fully open market,” First Choice said in a filing at the Public Utility Commission of Texas.

Some of the most egregious problems still unresolved include incorrect and late billing for customers that chose First Choice, a unit of Texas New Mexico Power Co, for electricity service during the pilot program now in progress. Electric Reliability Council of Texas officials said these issues will be “shaken out” before full competition is implemented.

“We are not going to delay the opening of the market, because I have every confidence that all systems will be ready,” said Tom Noel, CEO of ERCOT.

Despite these claims that ERCOT will have corrected the problems, First Choice documented its problems with switching customers. As of Sept. 28, First Choice requested switches for 2,687 customers. But First Choice reported it didn’t receive key data until Oct. 5 for 453 of those customers.

The data is required to help the company estimate customer usage so the correct amount of power can be purchased and scheduled. First Choice said it received initial meter reads for 339 of its customers.

From that set of customers, First Choice received monthly meter read data for 202 customers. As a result, First Choice cannot accurately bill the rest of its customers.

“As a result of the ERCOT system problems discussed above, First Choice expects to encounter significant dissatisfaction from the approximate 500 customers as of Oct. 5 that should have been billed, but have not due to lack of timely data,” the company said.

First Choice also determined the incumbent utility was still buying power for the same 339 customers who had switched to First Choice. The retailer said the double accounting creates more demand for power than the system requires.

“This situation creates a higher level of load and resource imbalance in the marketplace, creates problems with the settlement process, and in some cases can contribute to congestion,” First Choice said in its filing.

High congestion charges, the cost of moving more power than a limited transmission system can accommodate, top the list of complaints of many market participants. They say congestion charges are considerably higher than what was originally anticipated.

These charges are reflected in ERCOT bills under Balancing Energy Neutrality Adjustment (BENA). The BENA charges for August approached $100 million systemwide, one market participant said. Individual company charges varied dramatically.

“Some of the charges have been large enough to bankrupt a small company,” said First Choice. Texas New Mexico Power Co. received a BENA charge of close to $500,000 for Aug. 14. That charge was later reduced to $289,625, according to the filing.

Noel said the problem of BENA was essentially resolved. “BENA has been inconsequential since the first of September,” he said. He admitted the charges were “very high” for August when demand for power was high.

“BENA shows that the market is working quite well. They are creating congestion by trying to move low cost power across constrained lines,” he said.

Reliant Resources Inc., the unregulated retailer of Reliant Energy Inc., also complained in a filing about switching and billing problems but did not say whether the market opening should be delayed or not.

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