Marketer Calls on PUC to Tighten Standards as Several Power Retailers File for Bankruptcy

Marketer Calls on PUC to Tighten Standards as Several Power Retailers File for
Bankruptcy

STAMFORD, Conn., June 6 /PRNewswire/ -- A leading retail electricity
provider has called on the Texas Public Utility Commission to strengthen its
financial standards for competitive marketers as the third Houston-area
electricity marketer filed for bankruptcy.
"Electricity customers need to be protected from undercapitalized energy
suppliers in the same way sub-prime credit borrowers need to be protected from
predatory lenders," said Jeffrey Mayer, president and chief executive officer
of MXenergy."
This week more than 12,000 customers of electric retailer E-tricity were
moved to other providers by the Energy Reliability Council of Texas (ERCOT)
after the Decatur-based company defaulted on its financial obligations. This
default followed emergency actions by ERCOT when Pre-Buy Electric filed for
bankruptcy and National Power was unable to meet customer needs. On Tuesday
another marketer, Riverway a/k/a Sure Electric, LLC, also declared bankruptcy.
When suppliers fail, their customers are moved by ERCOT to one or more
"providers of last resort" which are allowed to charge up to 130 percent of
the market clearing price. Due to high settlement prices in recent weeks, the
formula could result in rates as high as 50 cents per kilowatt hour, almost
five times recent price levels.
Mayer expressed relief that the PUC has been acting swiftly to contain the
damage from defaulting marketers. "Texas has always been one of the country's
leaders in promoting the benefits of competition," he said. "But unless we
toughen the minimum standards that marketers must meet, more customers are
going to wake up to sudden spikes in their electricity bills."
MXenergy urged the PUC to follow the "best practices" of other states in
which it does business. Specifically, they urged the PUC to adopt higher
minimum financial standards, tests for competency in energy risk management
and minimum numbers of customer service representatives.
Mayer further said, "The Texas PUC has a tradition of learning from
previous challenges and has created a robust deregulated market. As the
summer approaches there is a critical need to move quickly so that consumers
will not bear the brunt of hot weather and hurricane induced price spikes. If
their suppliers are unable to manage the risk and fulfill their contractual
obligations. Customers are calling us in a panic when they can't get their
provider to pick up the phone."
"People are surprised to learn that the lowest price is not always the
most reliable," Mayer added. "Customers know they shouldn't buy their life
insurance from the lowest cost carrier, and now they are learning to be
cautious about whom they choose to supply them with power."
Most of the marketers who have defaulted were selling supply at fixed
prices, Mayer said. "When marketers default, customers are left unprotected
from today's skyrocketing market."
About MXenergy
MXenergy is one of the fastest growing retail natural gas and electricity
suppliers in North America, serving customers in 14 states and 39 utility
territories in the United States and Canada. Founded in 1999 to provide
natural gas and electricity to consumers in deregulated energy markets,
MXenergy helps residential customers and small business owners control their
energy bills by providing both fixed and variable rate plans. MXenergy is
committed to best practices in environmental conservation and is a member of
the Chicago Climate Exchange. For more information, contact MXenergy customer
care at 800.785.4373 or online at www.mxenergy.com. In 2007 MXenergy and
Vantage Power Services, L.P., completed a transaction that transferred Vantage
power customers in Texas to MXenergy.
Media Contact:
Joe McGurk
Phone: 203.378.1152 ext. 121
Mobile 203.683.8724
jmcgurk@cjpcom.com

SOURCE MXenergy

Joe McGurk for MXenergy, +1-203-378-1152, ext. 121, or Mobile,
+1-203-683-8724, jmcgurk@cjpcom.com