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Local 2 Investigates Discovers Electricity Pricing Deception

By Amy Davis

POSTED: Tuesday, May 13, 2008

Local 2 Investigates has discovered that one power company is raising rates for consumers who were supposedly locked in to a fixed-rate.

"Dear Valued Customer," reads the beginning of the letter Gregg Hughey received from his electric provider. "This is to notify you that the National Power Company finds it necessary to raise the price it charges for your electricity."

It is the same letter dozens of other Houston customers received this weekend, and most share Hughey's reactions.

"I was just furious," Hughey told investigative reporter Amy Davis.

Hughey signed a fixed-rate 18-month contract with the National Power Company last August at a rate of 11.9 cents per kilowatt.

"It said this is an 18-month price guarantee you wanted to lock in to take advantage of this rate, and it would protect me through the summer,” Hughey explained.

But just nine months later, before the heat of summer has set in, the National Power Company informed Hughey -- and all of its fixed-rate customers -- it is raising their rate to 15.3 cents per kilowatt.

"What about that guarantee?" Davis asked Hughey.

"Exactly," he answered. "That's my point. It seems like that would be illegal, in my book."

Like many of the consumers who e-mailed KPRC Local 2 Investigates, we had questions. So we called the Public Utility Commission. A spokesperson for the PUC told us it couldn't get through to anyone at the National Power Company, so we drove the company's office on F.M. 1960 near Interstate 45.

The receptionist said the office had so many calls Monday that their entire phone system crashed.

We asked to speak with someone, anyone with National Power Company, about the price increase, but no one would come out to talk with us.

PUC Commissioner Barry Smitherman said they are looking into this case to find out what, if any, action the PUC can take. Smitherman said the commission believes that electric providers cannot raise prices on a fixed-price plan.

Hughey said he worries that if he switches providers, the same thing may happen again -- and it just might. In a quick check of the state's Power to Choose Web site, we discovered several other companies also offering fixed rates. But the fine print reads, "Buyer understands that seller may also cancel the agreement due to a material change to the program or market conditions."

If the consumer wants to cancel the agreement, many plans hit them with an early termination fee. National Power Company's fee is $150 to $300.

An attorney for the National Power Company called hours after we left the business. She said National Power Company is raising rates because the price of electricity has increased dramatically over the last year. She also said it is unfortunate that some customers sign contracts without reading them first.

The PUC said it is still looking into this issue. Smitherman said he will let us know what the PUC can do to the company or for its customers. As soon as we hear from him, we'll let you know.

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