Great news - I received a response from my State Representative, Dawnna Dukes, regarding my complaints about TXU's plans to use credit scores to determine rates for customers:
Thank you for your e-mail regarding your concern with TXU utilizing credit scores to determine rates for their customers. I share your concern with the issue of credit scoring and I have been a strong opponent to its use in the insurance industry. I have included an article regarding the TXU credit scoring issue for your review that may be of assistance to you. According to the article, State Representative Oliviera from the Brownsville area will most likely be introducing legislation to prohibit the use of credit scores when setting electricity rates. I will support Representative Oliveira's legislation and I will keep a close eye on this issue.Here's the Quorum Report article (I hope this is fair use...thanks Harvey Kronberg) she refers to:
TXU ENERGY PULLS BACK FROM USING CREDIT SCORING FOR SOUTH TEXAS CUSTOMERSI love the jab at TXU's credit rating.Citing racial discrimination, Oliveira had threatened legislation
Has a threat of legislation and a murmuring of racial discrimination made an energy supplier pull back from using credit scores when setting electricity rates for its customers in South Texas?
On Sept. 20, state Rep. René Oliveira (D-Brownsville) wrote to Texas Public Utility Commission Chairman Paul Hudson to strongly protest TXU Energy's proposals.
Starting Sept. 27, TXU planned to set an 8 percent discount off the rate-to-beat price for customers with the best credit rating and a 4 percent discount to customers in a second tier. Customers with the worst credit scores or no credit score would have paid the highest allowable rate.
TXU wanted to start in South Texas first. Oliveira said that implied a "racial discrimination effect" and threatened to introduce legislation to prohibit using credit scores when setting electricity rates.
On Wednesday, a spokesman for TXU said the plan had been put on hold pending talks with the PUC.
"At this point, we are talking with the (Public Utility Commission)," Carlos Santos, spokesman for TXU Energy, told the Brownsville Herald. "It’s not something we’ve abandoned, but that doesn’t mean that it’s going to be implemented in the same form as we envisioned it originally."
Electricity deregulation began in Texas two years ago. Santos said TXU initially wanted to implement a new pricing program in markets where service had started after deregulation - namely, the Rio Grande Valley, Laredo and Corpus Christi.
Oliveira pointed out that credit scores would not have been used in setting rates for TXU customers in Dallas and North Texas, where there have been a high number of job losses in the high-tech sector.
"I believe the use of credit scoring may have discriminatory effects, especially on residents in communities with high minority concentrations, such as the Rio Grande Valley," Oliveira said, in his letter to Hudson.
"Such discrimination is, of course, illegal, and using credit scores may produce the same effect as discrimination based on race, national origin, marital status, or income."
Oliveira pointed to a recent report that showed that people who live in high minority areas, such as the Rio Grande Valley, have worse credit scores even after allowing for income, educational attainment, marital status and unemployment. "That implies a racial discrimination effect that must be prohibited," Oliveira said.
Oliveira said many Valley residents would be surprised to learn that the rates they were quoted to switch to TXU would be increased because of their credit score. He said setting increased rates for new customers bordered on a "bait and switch" scheme.
Oliveira said that under the plan, TXU could have increased prices to customers with a good payment history with electric bills but with an adverse credit incident with a cable or phone company.
"If you have never been late on your electric bill, TXU should not care about your relationship with the phone or cable company, or your furniture and car loans," Oliveira said. "TXU, which has a pretty mediocre credit rating as a corporation, is simply trying to improve its corporate bottom line by forcing higher rates on South Texans."
Recently, KGBT-TV Channel 4, in the Valley, conducted an unscientific poll on its Web site, asking viewers about setting electric rates by credit history. Of the 578 people who responded, 90 percent were against the policy.
So things look good for the time being. Thanks to everyone else who wrote letters. Please keep me posted if you run across anything else related to this issue.
Posted by sarah at September 23, 2004 11:31 AM | TrackBack