Electric Utility Halts Service; 4,000 in DFW Area Are Affected
By R.A. Dyer, Fort Worth Star-Telegram, Texas
May 28–AUSTIN — National Power Co., the small Houston-based electric retailer that recently announced plans to break its fixed-rate contracts and then reversed course under pressure from state regulators, will stop serving its customers this week.
As a result, thousands of National Power customers — including about 4,000 in North Texas — will lose their fixed-rate deals and be involuntarily switched to other electric providers.
A woman who answered the phone at National Power’s headquarters declined comment.
However, a spokeswoman at the Electric Reliability Council of Texas, the quasi-governmental organization known as ERCOT that operates the state’s power grid, confirmed that National Power has announced that it cannot meet its financial obligations. She said the company requested that its customers be moved to other companies.
ERCOT will begin switching more than 15,000 National Power customers today. The process is expected be completed by week’s end.
“Customers who are transitioned from National Power to another provider will be notified in accordance with [Public Utility Commission] rules which require both the defaulting retail electric provider and the new provider to notify the customer,” ERCOT announced in a prepared release.
Regulators said National Power customers with fixed-rated deals will get switched to “provider of last resort” companies, which typically charge rates higher than other providers. And customers looking to switch are likely to pay more as electric rates have increased in recent weeks because of the rising price of natural gas.
National Power customers not on fixed-rated deals will go to Amigo Energy, which has agreed to honor pre-existing contracts, according to the PUC.
The National Power meltdown marks the second time in a month that ERCOT has been forced to move customers from an apparently failing electric company to high-cost providers of last resort.
This month, more than 8,000 customers of Bridgeport-based PreBuy Electric were transferred after the company fell behind on payments for wholesale electricity and other items owed to the grid. Officials said that because PreBuy customers paid for their service in advance, the involuntary move may force many to pay monthly bills twice.
Financial difficulties at more than 10 other companies have prompted the transfer of about 50,000 other customers since deregulation started in 2002, according to regulatory and grid officials.
Geoffrey Gay, an attorney who represents the city of Fort Worth in utility matters, said more defaults may be just around the corner.
“It’s something that’s inevitable with the continuing price increases in the [wholesale electricity] market,” he said. “There’s going to be a lot of pressure on the retail electric providers that have slim margins to begin with. And it’s difficult to predict what’s going to happen with the constantly upward [price] curve.”
National Power customers received written notice May 6 that their low-cost fixed-rate plans would be canceled and that the company was jacking up rates.
Then, after the PUC became involved, the company announced May 16 that it was changing course and would honor the contracts.
ERCOT put the number of customers getting switched at 15,163, including 14,721 residential and 442 small nonresidential customers.
More than 4,000 are from Oncor’s North Texas service territory.
Online: www.powertochoose.com
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