A Clear Case of Deceptive Advertising

In a press release dated May 20, 2008, Gexa publicly represented that under their variable-rate plans, "customers will benefit when market prices fall, but they also will pay more if prices spike...".  The full press release can be viewed at

http://www.gexaenergy.com/We-reGexa/PressReleases/Press_20.aspx

Well, how come WE did not benefit from falling prices? Almost all REPs have a month-to-month plan that follows the wholesale cost of energy.  Clearly Gexa’s plan does not follow wholesale prices even though they said it would.  In fact, can anyone point me to even one Gexa customer that DID benefit from falling energy prices?

From the emails I’ve been getting, I’m certain it’s safe to say that no Gexa Customer has “benefited when market prices fall” even though market prices have indeed fallen - dramatically - since the middle of last year! If you are interested in joining a class action suit, send an e-mail to gexacase@yahoo.com

This is a clear case of false advertising. The rates Gexa has been charging under this plan have little to no relationship to energy ’s wholesale rates.  Even today, their variable rates are still at all time high margins compared to wholesale costs of energy.  Worse yet, they drop customers whose contract rates have ended into this “no contract” ripe off.

Deceptive advertisement--a criminal defense under Section 17.12 of the Texas Business and Commerce Code. http://tlo2.tlc.state.tx.us/statutes/docs/BC/content/htm/bc.002.00.000017.00.htm .

Gexa is Not in Good Standing with the Texas Franchise Tax Agency.

Apparently Gexa is not paying its franchise taxes. The status of all Texas businesses can be checked on line. This is the link to the state database allowing you to view Gexa’s status:

http://ecpa.cpa.state.tx.us/coa/servlet/cpa.app.coa.CoaGetTp?Pg=tpid&Search_Nm=Gexa%20&Button=search&Search_ID=14216749235

Assuming Gexa takes care of their taxes soon, no big deal - right? However, as a company, it is keeping in character with their past!  Is it poor business practices?  A simple mistake or two?  Were they short on cash?  Were they trying to get around legal obligations? What ever the reason, it is poor business at best. Poorly run businesses deserve to loose profits or even go out of business. But you decide.

In August of 2007 Gexa settled a federal violation the Federal Energy Regulatory Commission (FERC). Under the terms of the settlement, Gexa paid a $500,000 civil penalty and disgorge nearly $12,500 in profits with interest.   Quoting from FERC chairman Joseph T. Kelliher

"Some Federal Power Act section 203 transactions are highly complicated, and violations can be innocent. This was not a complicated transaction. There were two parties to the transaction, only one of whom was innocent. FPL Energy took measures to comply with commission rules and regulations, immediately self reported, and cooperated with our investigation. FPL Energy proved itself committed to compliance," said commission chairman Joseph T. Kelliher. "Regrettably, the other party to the transaction, Gexa Energy, proved, at best, indifferent to compliance. Here, Gexa's violations were knowing and deliberate. It is necessary to sanction Gexa for its blatant violations."

It’s not just the government Gexa screws with. In April of 2006 Gexa paid a $400,000 fine for unlicensed software violations. The Business Software Alliance pressed and won a case against Gexa.  Often these cases arise through tips from employees.  We know Gexa has some of those! 

In less than 2 years, Gexa spent over $900.000 in fines. One can only guess what they spent defending themselves. I don’t know about you, but $900,000 has got to hurt the bottom line.

In email discussions with some who have contacted me, it has been suggested that Gexa is out of money. There is evidence to support the possibility. Gexa filed to be exempted from some of the PUC finacial requirements.  It does not make sense to gouge lots of existing customers, knowing full well many will leave for other vendors, unless there is some gain to be had.   I’ll expand on this later.

 
 Links and Other Information
 

Deceptive advertisement--a criminal defense under Section 17.12 of the Texas Business and Commerce Code.

September 2008 Electric prices in Houston at an 8 month low (but not Gexa Energy Every month since September they have been higher, way higher)
 

State of Texas, illegal gouging summary
 

Hurrican Ike Govoner’s disaster declaration
 

Controversy over deregulation (I’m confident in time we will weed out the trashy operators and deregulation will finally deliver on its promise of better service and favorable rates.

Average Retail Price of Electricity to End User - US Government Statistics Compare Texas  Also note the average cost in this table for September 2008 of 11.29 compared to Gexa’s 19.49.

Major Disturbances and Occurrences

Some Competitor’s Rates in October 2008

Houston Chronicle DEREGULATION DEBATE