DATELINE: 16 September 2004
TXU unit hit with a big fine
Firm will pay $530,000 for misleading ads, claims
By SUDEEP REDDY
The Dallas Morning News
TXU Energy has agreed to pay the state a $530,000 penalty for airing misleading advertisements about its electricity rates and making other claims about its service quality.
The proposed settlement with the Texas Public Utility Commission would be the second-largest fine paid by a Texas electricity provider.
From January until April, TXU Energy ran radio ads featuring a testimonial from a customer who suggested that his electric bill increased 70 percent after switching from TXU Energy to a competitor.
The price change he claimed would not have been possible because the customer said his consumption had not changed. Currently, TXU Energy's rates are higher than most other providers'.
Incorrect claims
TXU Energy, a unit of Dallas-based TXU Corp., had defended the ads. But the company acknowledged in the settlement that it used some information that it knew was incorrect while the ads aired.
"We made a mistake," spokeswoman Kimberly Morgan said. "And when we make a mistake we'll always do what we can to ensure a fair outcome. We certainly apologize for any confusion or inconvenience this may have caused listeners."
The PUC staff, which negotiated the settlement, also took the company to task for airing other advertisements suggesting that TXU Energy was more reliable than other providers, even though its competitors use the same wires and poles.
The company disagreed that the inferences were improper. But it agreed not to make such statements in the future and to pay the penalty to resolve the dispute.
Approval needed
The latest settlement, which must be approved by the PUC commissioners, comes after the agency assessed a $220,000 fine in July against TXU Energy for a marketing campaign to win back customers who had switched providers.
The largest fine paid by an electricity provider came in January, when the PUC hit Direct Energy's parent Republic Power LP with a $750,000 penalty for improper disclosures to customers and other violations.
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