Consumer groups ask Railroad Commission to adopt stronger consumer protections for gas utility service (Nov. 2002).

Proposed rules would increase costs to consumers and fail to fully address needed reforms.

New late fees, onerous deposit requirements, and counterproductive proposals made by the gas industry are among major concerns submitted to the Railroad Commission by leading Texas consumer groups.

Consumers Union, Texas Ratepayers' Organization to Save Energy (Texas ROSE) and Texas Legal Services Center, in a detailed 21-page response to the proposed rule revisions, say that while the proposed rules incorporate a few needed reforms, on balance the proposal does not treat consumers fairly.

"It will be a long, cold and costly winter for Texans and rules about to be considered by the Railroad Commission could help — or make matters worse, depending on how the Commissioners vote, " said Janee Briesemeister, senior policy analyst with the Southwest Regional Office of Consumers Union. "Home heating bills are expected to increase significantly this winter based on the combined effect of high natural gas prices and colder weather. The Railroad Commission has the opportunity to help consumers manage these costs by adopting much needed reforms. "

The consumer groups are seeking the following reforms that will help consumers survive high gas bills this winter:

• Extend the time for bill payment to at least 18 days. Cash flow is often a problem for workers, such as state employees, who are paid once per month.
  
• Reject proposed new late fees. Late fees are not permitted in the law. Moreover, late fees compound problems for consumers who fall behind on their bills when prices spike during the high usage season.
  
• Require the utilities to offer consumers alternative payment arrangements, such as level and average plans that enable consumers to spread out payments and budget for gas bills. Currently, the Commission "encourages" — but does not require — utilities to offer these plans which help consumers mitigate the impact of high gas prices.
  
• Eliminate proposed penalties on deferred payment plans.
  
• Eliminate proposed deposit requirements that would cause many consumers to have to provide increased deposit payments whenever their home heating bills increase due to higher than normal usage or higher than average gas prices.
  
• Prohibit the utility from charging a consumer for requesting information about consumer rights and alternative payment plans. The proposed rules would permit a utility to charge a per page charge when a consumer requests information.
  
• Clarify that the use of the interchangeable terms for service termination of gas utilities could be used as a loophole for utility companies, and possibly allow utility companies to bypass laws against disconnection during extreme weather.

"At a time when high home heating bills are on the horizon, these proposals would add yet more costs to consumers," said Randy Chapman, Director of the Texas Legal Services Center. "Late fees could be a significant hit on consumers this winter. Late fees on utility bills aren't an effective incentive to pay for persons who are waiting for their paycheck. We don't see where these late fees are even permitted by law--its another new charge out of nowhere. Late fees ignore the law to the benefit of utilities and take money out of the pockets of consumers. "

The rules proposed by the agency are lacking, but the revisions suggested by the gas industry are much worse. "Halloween is coming up, but what is really scary is the attitude the gas industry has toward its customers, " said Carol Biedrzycki. "The comments submitted by The Texas Gas Association, TXU Gas, Entex, and Southern Union Gas would add more costs, reduce consumer rights, and give the utility the undisputed upper hand in all of its dealings with consumers. If the Railroad Commission follows the industry suggestions, the rules should be renamed the 'Anti-consumer service rules'."

Industry proposals would severely limit the ability of consumers to establish credit, require consumers to pay disputed bills, impose late fees, and impose new deposit requirements. They would also continue copying charges for providing consumers with information, limit the information given to consumers about making complaints, and limit the detail on bills for gas utility service. In addition, the industry opposes making deferred payment and alternative payment arrangements mandatory, meaning the consumer will not have access to budget billing arrangements during the high cost winter heating season unless the utility decides to make plans available. Some, but not all, offer some type of budget billing, and not all offer deferred payment plans for consumers who fall behind on payments.

The only area on which the consumer and industry comments agree is that both groups recommend that consumers and utilities should retain the flexibility to set up deferred payment plans over the telephone. The proposed rules would require such plans to be in writing, thus causing a delay before the payment plan could take effect.

The rules under consideration would amend the Railroad Commission's quality of service rules, which establish consumer protections for gas utility service in unincorporated areas. Municipalities can set their own rules for gas service.