Control Number: 33622
Item Number: 1
Addendum StartPage: 0
COMPLAINT AGAINST
CONSTELLATION NEWENERGY
AND TXU ENERGY BY MV’
EASTGATE INVESTORS SIX, L.L.C.
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0
0
PU
COMPLAINT AGAINST CONSTELLATION NEWENERGY AND TXU
ENERGY BY MV EASTGATE INVESTORS SIX, L.L.C.
Table of Contents
I. JURISDICTION .....................................................................................................................
11. PARTIES AND TERRITORIES AFFECTED .......................................................................
III.
STATEMENT OF FACTS .................................................................................................
IV. NOTICE ..............................................................................................................................
V. RELIEF REQUESTED...........................................................................................................
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COMES NOW MV Eastgate Investors Six, L.L.C. ( “Eastgate”), and complains to the
Public Utility Commission of Texas (“Commission”) regarding violations of its regulations by
Constellation NewEnergy (“Constellation”) and TXU Energy (“TXU”), as follows:
I.
JURISDICTION
The Commission has jurisdiction over the subject matter of and the parties to this Petition
pursuant to the Public Utility Regulatory Act (“PURA”), including specifically
$5
12.001,
14.051, 17.004, 17.102, 17.157, & 39.352 as codified in the Texas Utilities Code, and pursuant
to Commission Procedural Rule $ 22.242 and Commission Substantive Rule
$0 25.485
&
25.495. Prior to filing this formal complaint with the Commission, Eastgate has attempted
informal resolution privately, but was not able to successhlly resolve the matter privately. Also
prior to filing this formal complaint with the Commission, Eastgate attempted informal
resolution through the Commission Staff. The Commission Staff on December 7, 2006, stated
that it would take no action on the informal complaint because of the complexity of the issues,
the sophistication of the parties, and the prior efforts to resolve the complaint, and that it does
not object to Eastgate filing without further delay a formal complaint with the Commission
concerning the dispute. Therefore, this dispute is ripe for Commission resolution, and the
complainant is timely.
11.
PARTIES AND TERRITORIES AFFECTED
Eastgate is the current owner of a certain office building and property known as the
Brookriver Center, located at 8150-8200 Brookriver Drive, Dallas, Texas (the “Brookriver
Center”). On or about October 11, 2005, Eastgate purchased Brookriver Center fi-om YPI 8200
Brookriver Partners, L.P. (“YPI”). Eastgate is a retail customer who purchases and ultimately
consumes electricity, and an entity with legal capacity to be billed for retail electric service.
Constellation is a retail electric provider (“REP”)holding Commission Certificate No.
10014 and authorized to provide retail electric service throughout the customer choice areas of
Texas. When Eastgate purchased Brookriver Center from YPI, electrical service was provided to
the Brookriver Center by Constellation under a contract with YPI, and Constellation continued to
provide service to Brookriver Center for a period of time thereafter. The Texas office address
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for Constellation is: 1221 Lamar, Suite 750, Houston, TX 77010. Constellation’s authorized
representative is: Vanus Priestley, Constellation NewEnergy, 701 Brazos, Ste. 970, Austin TX
78701, Phone 5 12-381-1900, Fax 5 12-381-1898, e-mail vanus.priestley~constellation.com.
TXU is a REP holding Commission Certificate No. 10004 and authorized to provide
retail electric service throughout the customer choice areas of Texas. TXU is also an Affiliated
REP. For a period of time, TXU allegedly provided service to Brookriver Center at its Price-toBeat rates. The Texas office address for TXU is: 1601 Bryan St., Dallas, TX 75201. TXU’s
authorized representative is: Cecily Small Gooch, 1601 Bryan St., 2 1st Floor
Dallas,
TX
75201, Phone 214-812-6034, Fax 214-812-6032, e-mail cecily.gooch@,txu.com.
The only territory affected by this complaint is the Brookriver Center located at 81508200 Brookriver Drive, Dallas, Texas.
111.
STATEMENT OF FACTS
On October 11, 2005, Eastgate purchased Brookriver Center fi-om YPI. At such time,
electric service was provided to the Brookriver Center by Constellation, under a contract with
YPI. It is Eastgate’s understanding that such contract provided for market flexible pricing of
electricity determined by reference to the Market Clearing Price for Energy (“MCPE”). Upon
Eastgate’s purchase of Brookriver Center, Constellation continued to provide electricity to the
property on a month-to-month basis under the MCPE pricing structure in place with YPI.
Eastgate paid all invoices sent by Constellation for electricity provided after October 11,2005.
Immediately upon purchasing Brookriver Center, Eastgate, through its property
managing agent, John Myers of Peloton Real Estate Management, L.L.C., approached
Constellation to discuss contract options with Eastgate. Mr. Myers conducted his negotiations
with Steven Gatz at Constellation. The parties agreed that Eastgate would continue to receive
electricity under the MCPE pricing structure in place already for the consuming facility. The
parties also discussed the possibility of Eastgate signing a fixed price contract. Mr. Gatz
requested certain credit information fi-om Eastgate, which was provided.
On March 16, 2006, while Constellation was in the process of its credit review process,
Constellation sent a letter to YPI stating that YPI owed an outstanding balance to Constellation
that was past due. The letter further indicated that service to YPI had been terminated as of
February 23, 2006. Upon learning of such letter, Mr. Myers contacted Mr. Gatz, who assured
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him that such letter was not directed or applicable to Eastgate, and that Constellation would
continue to provide electricity to Eastgate at the MCPE price on a month-to-month basis until
Constellation finished its credit review.
Not only did Mr. Gatz confirm that the letter was directed only to the prior owner, but email communications between Mr. Myers and Mr. Gatz show that Mr. Gatz continued to
negotiate terms and conditions of a full written contract (to supersede the month-to-month
arrangement), including requests for financial information and pricing discussions. During these
negotiations Mr. Myers continued to rely on the repeated representations by Mr. Gatz for his
understanding that Eastgate was being served by Constellation on a month-to-month basis.
Then in July 2006 Eastgate received an invoice from TXU Energy for approximately five
months of alleged electricity service to Brookriver Center. The invoice also claimed that TXU
had begun providing electricity to Brookriver Center on February 24, 2006, the day after
Constellation cancelled service to the prior owner. The price charged by TXU for the electricity,
however, was at the Price-to-Beat rate charged by TXU, which is more than double the rate
charged to Eastgate by Constellation under the MCPE pricing.
Eastgate then embarked upon discussions with TXU, seeking to have the alleged TXU
service provided under a competitive rate contract such as MCPE pricing. Those discussions
were unsuccessful. As a result of TXU’s refusal to provide competitive electric service to
Eastgate, it then entered into negotiations with another major REP and entered into an agreement
for retail electric service with that REP effective November 9,2006.
Accordingly, Eastgate has disputed the amounts TXU has tried to charge, and has
tendered payment to TXU for its alleged service to Eastgate from February 24 to November 9,
2006, using an amount equal to what Eastgate would have paid to Constellation for service
during that same time period. TXU has refused to accept, and returned, the tendered payments.
Both Constellation and TXU are each required to provide notice to any customer
transitioned from a REP to the affiliated REP. Commission Substantive Rule § 25.482(b)(l)(A)
& (f) (requiring the REP to send notice of termination for non-payment and transfer of the
customer to the affiliated REP with such notice provided no less than ten days prior to
termination); Commission Substantive Rule 5 25.475(d)(3) (REP must inform any new customer
of its terms of service).
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At no time did Eastgate receive notice from either Constellation or TXU that Eastgate
was being transitioned from Constellation to TXU. In fact, until Eastgate received the TXU
invoice in July 2006, Eastgate had no reason to believe that TXU was providing electricity to
Brookriver Center.
Therefore, instead of the required notices, Eastgate was permitted to
continue negotiations with Constellation (with the understanding that Constellation was
continuing to provide its month-to-month service) while unknowingly being treated by TXU as
subject to its Price-to-Beat rate. Constellation’s failure to provide notice of Eastgate’s transition
to TXU, and TXU’s failure to provide notice of its terms of service, were both in violation of the
Commission’s rules. Since neither provider complied with the Commission’s requirements, the
result was excessive and unreasonable charges.
Furthermore, Commission Substantive Rule § 25.482(c)( 1) prohibits the termination of
service with a customer for “delinquency in payment for electric service by a previous occupant
of the premises” (subject to an exception, not applicable here, for an occupant that is of the same
household as the previous occupant).
By terminating the month-to-month service to Eastgate
because of the delinquency in payment for electric service by a previous occupant YF’I,
Constellation violated this prohibition on termination of service
In addition, Commission Substantive Rule
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25.495 provides that in the case of an
unauthorized transfer of service, the affected REPS shall take all actions necessary to bill
correctly all charges, so that the end result is that, inter alia, the customer shall pay no more than
the price at which the customer would have been billed had the unauthorized switch not
occurred. By their actions and refusals described above, Constellation and TXU have also
violated this requirement to independently rectify the unauthorized transfer of service.
Constellation and TXU have clearly violated the express requirements of the
Commission’s rules, and have continued on a course of conduct that is both unlawfid and
unreasonable. Any and all charges, above what has already been voluntarily paid by Eastgate to
Constellation and voluntarily tendered to TXU at the month-to-month MCPE price are unlawful
and invalid, as a direct result of both Constellation’s and TXU’s unlawhl conduct, and therefore
should not be the responsibility of Eastgate to pay.
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IV.
NOTICE
Eastgate will provide notice of this filing to Constellation and TXU, the parties directly
affected by this complaint, by mailing a copy of same to the authorized representatives duly
!i&d
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the
CGIiuTlSSiGii’S !is:
Gf re@SkrCd WPS, iiS ShGVvX
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notices or other communications to Eastgate concerning this complaint should be addressed to
the undersigned attorney as the authorized representatives of Eastgate for this proceeding.
V.
RELIEF REOUESTED
Texas Utilities Code fj 39.352, entitled “Certification of Retail Electric Providers,”
provides in subsection (c) that “[a] person applying for certification under this section shall
comply with all applicable customer protection provisions, disclosure requirements, and
marketing guidelines established by the commission and by this [Title 2, which is PURA].
This statutory compliance requirement in Texas Utilities Code $ 39.352 therefore
includes the notice requirements set forth in Commission Substantive Rule
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25.475 and
25.482, the service termination prohibition set forth in Commission Substantive Rule $0 25.482,
and the unauthorized service transfer rectification requirements set forth in Commission
Substantive Rule $5 25.495.
This statutory compliance requirement in Texas Utilities Code $ 39.352 also by express
reference includes other statutory customer protection provisions in PURA, to wit:
Tex. Util. Code fj 17.004, entitled “Customer Protection Standards,” which
provides in subsection (a)(l) that “[all1 buyers o f . . . retail electric services are
entitled to:
protection fiom fraudulent, unfair, misleading, deceptive, or
anticompetitive practices, including protection fiom being billed for services that
were not authorized or provided . . . .”
Tex. Util. Code $ 17.102, entitled “Rules Relating to Choice,” which provides in
relevant part that the Commission shall adopt and enforce rules that “provide that
unauthorized changes in service be remedied at no cost to the customer” and
“require refimds or credits to the customer in the event of an unauthorized
change.”
Tex. Util. Code fj 17.157, entitled “Disputes,” which provides in subsection (a)
that the Commission “may resolve ksputes between a retail customer and a
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billing utility, service provider, telecommunications utility, retail electric
provider, or electric utility,” and in subsection (b)(3) that in exercising its
authority under subsection (a), the Commission may require a REP “to refund or
credit overcharges or unauthorized charges with interest” if the REP has failed to
comply with Commission rules.
Eastgate accordingly requests that the Commission order TXU to reverse all unlawful
charges, which are the amounts in excess of the amounts Eastgate has already tendered to TXU
at the prior MCPE month-to-month price, due to TXU’s failure to provide the required notice. In
the alternative, Eastgate requests the Commission to issue an order requiring Constellation to pay
TXU the difference between TXU’s Price-to-Beat charges and the MCPE payments that Eastgate
has already tendered to TXU, due to Constellation’s failure to provide the required notice.
Eastgate further requests that the Commission issue such orders as may be reasonable to
preserve the rights of Eastgate during the processing of this complaint, including to the extent
necessary orders requiring TXU to comply with the requirement in Commission Substantive
Rule
5 25.495(b)(2)(B) that it cease any collection activity related to the alleged unauthorized
switch in service until the complaint has been resolved by the Commission.
Respectfully submitted,
MV EASTGATE INVESTORS SIX, L.L.C.
Thomas K. Anson (Texas SBN 01268200)
Strasburger & Price, L.L.P.
600 Congress # 1600, Austin, TX 78701
512/499-3600 / 512/536-5718 ( f a )
ATTORNEYS FOR MV
INVESTORS SIX,L.L.C.
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EASTGATE
CERTIFICATE OF SERVICE
I certify I served the foregoing on counsel for the Commission and upon the authorized
represmtattives for the parties against whom this complaint is directed this December
,2006,
by fax delivery at the following:
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Keith Rogas
Jeffrey T. Pender
Legal Division
Public Utility Commission of Texas
1701 N. Congress Avenue
Austin, Texas 78711-3326
Fax: 5 12/936-7268
Vanus Priestley
Constellation NewEnergy
701 Brazos, Ste. 970
Austin TX 78701
Fax: 512-381-1898
Cecily Small Gooch
TXU Energy
1601 Bryan St., 21st Floor
Dallas, TX 75201
Fax 2 14-812-6032
Thomas K. Anson
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