Phoenix auditors - need some input on a tricky situation. Large office building client participates in APS's Critical Peak Pricing demand response program. When they were on bundled service, they got credits of $12-15,000 annually for curtailing load during peak events. Switched to a competitive supplier (Constellation) 18 months ago, and now the demand response credits are only showing up on the APS delivery portion - about $3,200 last year. Constellation claims the CPP credits are 'embedded in their competitive rate' but won't provide documentation showing how. Customer is missing out on $8,000+ annually. Contract language is vague about demand response program participation. Anyone dealt with suppliers not properly passing through DR credits?
APS demand response credits - supplier not passing through savings
Carla, I haven't worked with APS specifically, but I've seen similar issues in other deregulated markets. The problem is that demand response programs often have both capacity and energy components. The utility (APS) probably still handles the capacity portion, but the energy credits might flow through the supplier. Constellation should be able to provide monthly statements showing exactly how much DR value they're crediting. If they can't document it, they're probably keeping the money.
This is a classic issue in competitive markets. Many suppliers pocket the demand response payments and claim they're 'factored into the rate.' Randy here from Memphis - we don't have retail choice in TVA territory, but I've consulted on cases in Texas and Pennsylvania where suppliers did exactly this. Demand that Constellation provide monthly reconciliation statements showing: 1) DR events called, 2) customer's curtailment response, 3) credit calculation, and 4) how it was applied to the bill. If they refuse, file a complaint with Arizona Corporation Commission.
Randy and Diane, thanks for the advice. I did request DR documentation from Constellation and they provided a generic spreadsheet showing 'demand response value: $847 annually.' No detail on individual events, no explanation of the calculation methodology. Meanwhile, when the customer was on APS bundled service, they got detailed monthly reports showing each DR event, the baseline calculation, actual curtailment, and credit amount. It's like night and day in terms of transparency.
Carla, that generic spreadsheet is a red flag. Legitimate demand response crediting requires detailed event-by-event documentation. Here in Nebraska, our DR programs (while still utility-managed) provide extensive reporting. I'd bet money that Constellation is collecting the full DR payments from APS but only crediting the customer a small fraction. Check the contract's termination clause - if there's an early exit fee, it might still be worth switching back to APS bundled service or finding a more transparent supplier.
This thread highlights why I'm skeptical of deregulation claims about 'increased customer choice.' Up here in South Dakota, we don't have retail choice, but our utility provides clear, detailed reporting on all programs and credits. When you introduce profit-motivated middlemen (competitive suppliers), transparency often decreases and customers end up worse off. Carla, definitely file that ACC complaint - they need to know suppliers are potentially deceiving customers about DR program participation.
Joanne makes a good point about the transparency issues. Filed the ACC complaint yesterday and also sent a formal notice to Constellation demanding full DR documentation going back to the start of service. Customer is frustrated because they specifically asked about demand response program impact during the sales process, and the rep assured them 'everything would stay the same, just at a lower rate.' Clearly not the case.
Carla, that sales rep statement could be key evidence for your complaint. If they made specific promises about DR program participation and didn't deliver, that's potentially deceptive marketing. Save any emails, sales materials, or recorded calls if available. In regulated markets, utilities have to provide standardized service. In competitive markets, suppliers can basically make up their own rules unless regulators step in.
This is exactly why Nebraska was so slow to embrace deregulation. Stories like this make customers nervous about switching from reliable utility service to profit-driven suppliers. Carla, have you calculated what the customer's total savings/losses have been since switching? Sometimes the competitive rate is low enough to offset the lost DR credits, but often it's not.
Lewis, good question. Did a full cost analysis: Constellation's rate is $0.091/kWh vs APS bundled at $0.104/kWh. That saves about $18,200 annually on energy costs. But they're losing $8,800 in DR credits, so net savings is only $9,400. Problem is, the customer was told they'd save $22,000 annually - they're missing $12,600 in promised savings. Plus there's a $2,500 early termination fee if they want to switch back before the 3-year contract expires.
Carla, those numbers show clear misrepresentation by Constellation. Customer was promised $22K savings, actually getting $9.4K - that's a 57% shortfall. The early termination fee makes it even worse because they're trapped in the contract. This is exactly why I tell clients to be very skeptical of competitive supplier promises. They'll lowball the rate quote and hide the ancillary costs until it's too late to cancel.
Randy's math is right - 57% shortfall from promised savings is grounds for contract cancellation based on misrepresentation. Most states have 'cooling off' periods for energy contracts, but Arizona might also have broader consumer protection remedies. Carla, check if Arizona has specific laws about energy marketing misrepresentation that could void the early termination fee.
Ken, good suggestion. Arizona does have a 10-day cancellation right for energy contracts, but that expired long ago. However, ACC has rules about 'material misrepresentation' that could void contracts. The key will be proving that Constellation knew about the DR credit issue and deliberately misled the customer about total savings. I've got the original sales proposal that specifically mentions 'maintaining all existing utility programs and credits.'
This whole thread is a great case study in why customers need independent auditing before AND after switching suppliers. Alice here from Virginia - we're just starting to see more competitive options with Dominion, and I'm definitely going to use this example to show clients why they need professional review of supplier proposals. Carla, please keep us updated on how the ACC complaint goes. Could set important precedent for other states.