The Power to Choose
Reliant Energy enters market as electric provider
BY TERRIE GONZALEZ MANAGING EDITOR

Residential customers in Rusk, Jacksonville and Alto have new options to consider in selecting an electric service provider.

Reliant Energy of Houston began offering six options effective Jan. 29 in select cities in Northeast Texas. Besides the cities in Cherokee County, the new marketing strategy includes 25 communities in and around Fairfield, Mexia and Groesbeck.

"We started in Houston, but we have a very good market share in Texas," said Derrick Mauzy, director of retail market analysis. "We wanted to expand our marketing efforts to other areas not touched before."

Reliant Energy is offering enticements to get customers to make the switch from their longtime service provider, TXU-SESCO. Depending on the option selected, Reliant is offering free gift cards to Target, ranging in value from $10-$50.

Kilowatt prices start at 13.2 cents/kWh for a 24-month contract and go up to 14.6 cents for electricity that is generated from 100 percent windpower.

Reliant Energy calls its new service "a full suite of pricing plans, payment options and services to meet the diverse needs of customers." Plan options include longterm, month-to-month, renewable and power market tracking plans.

"Reliant Energy is delivering the benefits of competitive markets to customers by providing choices that offer savings and protection from potential increases in electricity costs," said Gregg Hollenberg, vice president, residential markets."

In coming months, Reliant plans to utilize marketing channels to reach new customers through direct mail, telemarketing and door-to-door contact.

"We hope to have a significant market share over a period of time," said Mr. Mauzy. "We would eventually like to hit 25-30 percent."

The dominant electric provider in Jacksonville, Alto and Rusk, TXU-SESCO, offers a single option to residential customers. That rate is currently 14.2 cents/kWh, although the price could fluctuate up or down with 45 days' notice to customers.

While TXU does not currently offer tiered option plans to TXU-SESCO customers, other TXU customers in north Texas, including Dallas, have as many as 10 plans to choose from. "(Adding option plans to TXU-SESCO) is something that we are always evaluating as we look into other areas," said Sophia Stoller, TXU spokeswoman.

Besides TXU-SESCO and Reliant, marketplace competitors in Jacksonville, Rusk and Alto include Texas Power and Gexa Energy.

The Public Utilities Commission hosts a website that compares utility companies in the same market. For more information, visit www.powertochoose. org and follow the prompt for a zip code. The website cites the fuel used to produce electricity, along with pricing information, contracts and emissions.

Those without access to the Internet can call (866) 797-4839 for assistance in selecting a retail electric provider.

Customers are also noticing choices in the flexibility on payment options. Some companies allow customers to choose the day of the month when their electric bill is due. Both TXU and Reliant now offer customers the option of paying bills by debit card and credit card. TXU began offering this service six months ago without an official announcement or fanfare.

The PUC recommends that consumers know whether electric providers assess a fee to disconnect and terminate service before the contract ends.

With the 14-month and 24- month contract plans offered by Reliant, customers are assessed a $100 and $200 termination fee respectively, after the second month. However, month-to-month and renewable energy plans have no termination fees.

Another electric provider program involves a business pyramid, where independent agents sign up a group of customers who become agents, and sign up other customers.

If some of the offers appear to be too good to be true, they probably are, said Ms. Stoller.

"In some of our other TXU markets, we have seen some providers offer electricity as much as 30 percent lower than TXU," said Ms. Stoller. However, the fine print states that the rate is only for three months and the company can raise rates at any time. Some of the new electric service providers have no customer service representatives; they receive comments/complaints via e-mail.

TXU-SESCO serves approximately 42,000 residential and small business customers in East Texas.

Approximately seven percent of that customer base qualifies for low income assistance, which amounts to a 10 percent reduction in electricity costs.

Last November, TXU-SESCO customers were given a $100 appreciation bonus. The company rebated $25 in November 2005, with another $25 rebate scheduled this month.

"Then we will have two more in the next two quarters," said Ms. Stoller. "This amounts to four percent of the (14.2 cent/ kWh) rate."

During 2005, TXU-SESCO customers in Cherokee County were paying one of the lowest utility rates in Texas, 8.1 cents/kWh. However, TXU raised rates 62 percent to 14.2 cents/kWh on Jan. 1, 2006, because of the spiraling cost of natural gas.