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Under Staff’s proposed recommendation as part of implementing a streamlined complaint process, customer complaints at the PUC against REPs would still begin with a process, similar to the current “informal” process, under which the PUC’s Office of Consumer Assistance (OCA) would investigate an individual’s complaint to evaluate whether a possible violation of Commission rule has taken place. OCA would assist the parties in coming to an informal resolution.

Highlights of Staff’s Proposed Complaint Process is presented below.

Proposed Process Sequencing under Existing and Amended Rules

Existing Complaint Process – Under existing rules, a complainant is required to begin the complaint process by filing an informal complaint with the OCA. As described above, an investigator from the OCA attempts to resolve the complaint within 35 days from the date on which the complaint is received. At the conclusion of this informal process, the investigator will issue a closing letter that notifies the complainant that if the complaint was not resolved to their satisfaction, the complainant may file a formal complaint with the commission. In some instances, such as when the complaint involves accusations of anti-competitive practices, abandonment, or improper disconnection of service, the complainant is permitted to bypass the informal complaint process and proceed directly to the formal complaint stage. The existing process also permits a complainant to request a good cause exception and bypass the informal complaint process for other reasons. These provisions exist because some issues are poorly suited for informal resolution and are better determined by the commission or another court of proper jurisdiction.

Amended Complaint Process – Under the amended process, the informal complaint process will proceed as described above. At the conclusion of the informal complaint process, if a complainant is not satisfied with the outcome of the process, they are then free to pursue an action in a court of proper jurisdiction. Additionally, if the OCA identifies a possible violation during its investigation, it will refer the complaint to DICE for evaluation. As described above, DICE will investigate the regulated entity for compliance with applicable law and use reasonable enforcement discretion in determining whether to pursue a separate enforcement action against the regulated entity. Finally, the amended process also preserves the list of exceptions and the ability for a complainant to request a good cause exception to the informal resolution process for good cause. Under the amended process, this takes the form of a request to OCA to issue a closing letter and refer the matter to DICE. As with the existing process, this allows interested litigants to exhaust their administrative entities sooner and clears the way for DICE to bring a separate enforcement action against the entity, if it is deemed appropriate to do so.

DICE Investigation Process – A number of commenters had questions related to how the commission’ s enforcement process will operate under the new rule. To provide more transparency on this subject, the commission provides the following discussion of DICE’s current process.

Broadly speaking, DICE has discretion to investigate entities under the jurisdiction of the commission for compliance with applicable legal requirements. With regards to informal complaints, DICE currently has several processes in place for reviewing informal complaints for potential violations, including a periodic review of the complaint database. This periodic review identifies entities with multiple complaints for increased scrutiny to ensure prudent use of the commission’s resources. DICE also targets complaints based on the severity of the alleged violation and complaints flagged by the OCA for further review. Under the new rule, the coordination of efforts between the two divisions will increase by establishing a more direct pipeline to DICE for complaints involving potential violations identified by the OCA and, if appropriate, an increased cadence of DICE’ s periodic review of the complaint database. However, in every instance, DICE will base its decision on whether to pursue enforcement on its own evaluation of the regulated entity’ s compliance with applicable law, which is not limited to the issues, evidence, or consumers involved in a referred complaint.

As stated above, a DICE enforcement action is a contested case that, with a few exceptions involving preventing imminent harm to the public, affords the regulated entity with notice and opportunity to request a hearing. As with formal complaints, these contested cases are public and conclude with formal commission action at an open meeting.

Several comments by regulated entities also expressed concerns regarding notice of a DICE investigation or the expenditure of resources associated with enforcement actions. Because DICE will continue to conduct a periodic review of every complaint, it is not practicable for DICE to provide notice in every instance in which it is reviewing an informal complaint. However, DICE will continue its general practice of contacting most regulated entities when it opens an actual investigation prior to taking formal enforcement action (in certain instances, DICE will forego informal communications and proceed immediately to taking formal action in front of the commission). These contacts typically include an opening letter, notifying the regulated entity that an investigation has been opened and providing the investigation number, and a finding of violation, which includes a description of suspected violations and any punitive measures, such as an administrative penalty, that DICE intends to recommend to the commission. DICE also requests any necessary documentation from the regulated entity it needs to continue its investigation. Historically, DICE is often able to secure the agreement of the regulated entity to come into compliance with commission rules and remediate any suspected violations without the need for a burdensome administrative hearing at SOAH. Even in situations in which DICE and the regulated entity reach a settlement agreement on the facts and appropriate remedy, however, the decision is not final until it is publicly filed and approved by the commission at an open meeting, ensuring transparency.

General Comments -Formal Complaints – “As described above, one of the primary features of the proposed rules is the elimination of the formal complaint process. Several commenters expressed support or opposition to this procedural shift in general comments and with regards to specific rule sections associated with the formal complaint process. Because these comments all hinge on whether the commission retains its current formal complaint process, it addresses these comments together (e.g. if the commission eliminates the formal complaint process, provisions related to the docketing of formal complaints are unnecessary).

Commission’s Response – “The commission declines to modify the rule to retain the existing formal complaint process, as requested by commenters. The commission also declines to retain various individual provisions of the existing rules related to the formal complaint process, such as the docketing of formal complaints, as requested by commenters, because these provisions are unnecessary.

As described above, the formal complaint process has resulted in protracted and resource intensive contested cases, often involving claims requesting relief the commission is incapable of granting, minor disputes relative to the arduousness of the process, and delayed judicial or enforcement action. Under the adopted rules, the commission anticipates the enforcement-driven approach will achieve better, more efficient results for a greater number of consumers, especially those without the resources to obtain legal counsel to litigate a formal complaint. This brings the commission’s complaint process in line with many of its peer agencies across the state that do not address complaints through contested cases.

The commission agrees with OPUC and TNMP that the proposed rule exceeds what is contemplated by SB 790. However, as noted by OPUC, the intent of SB 790 was to provide, for certain water and wastewater billing disputes, a “simple, inexpensive, and expeditious complaint process rather than only the complex, expensive, and long contested case route.” The commission endorses this policy goal for water and wastewater billing disputes and extends this same reasoning to other areas with its jurisdiction. Additionally, the commission is not under any statutory obligation to utilize contested cases to process complaints, so exceeding what was specifically contemplated by SB 790 is permissible.

The commission appreciates the concerns related to the ability of individual complainants to bring their own cases in front of the commission. However, the commission expects the amended process to produce significantly better results for consumers and to be significantly more user friendly. Under the current process, potential complainants often express frustration over having to bring their own formal case at the conclusion of an informal complaint in which OCA identifies a possible violation that the regulated entity does not agree to remedy. The time and resources required to litigate a formal complaint is a significant barrier to doing so. By increasing DICE’s role in the review of potential rule violations identified during the complaint process, experienced enforcement attorneys can act, not only on behalf of the individual customer, but on behalf of all similarly situated customers. Under the current process, enforcement actions are sometimes delayed until after the outcome of an ongoing formal complaint. The adopted rules eliminate that delay. Further, the elimination of the formal complaint process enables an individual complainant who is interested in pursuing legal action in a court of proper jurisdiction to do so sooner.

Regarding TNMP’s claim that the revised process may lead to enforcement actions in scenarios in which an individual complainant may have decided not to file a formal complaint, the commission agrees. However, this is a benefit of the new process. If a consumer does not file a formal complaint because the regulated entity decides to offer an individual refund or because they do not have the resources to pursue the complaint, it is still incumbent upon the commission to ensure that the regulated entity comes into compliance with the commission’s rules. This is especially the case when an issue affects a large number of consumers, but the cost of litigation would exceed the possible benefit for any individual customer. However, as described above, DICE will exercise independent discretion over whether an enforcement action is appropriate, so increase in referrals to DICE will only result in more enforcement actions for entities that are not in compliance with commission rules.

The commission also agrees with commenters that value transparency and the benefit of a public record of compliance issues. As described above, an enforcement action – even one resolved via settlement agreement between DICE and the regulated entity – is not official until it is publicly docketed and acted on by the commission. Further, because a DICE investigation is likely to involve a more comprehensive audit of the compliance issue, the information in the record from an enforcement case will provide more details on the extent of the compliance issue without, in many cases, requiring the public filing of information related to individual complainants (e.g. rather than a single bill being offered as evidence, DICE may be able to show that hundreds of consumers experienced a billing error).

REP Complaint Data and Reporting

With regards to the Sierra Club’s request for complaint data to be published on the commission’s website, the commission declines to modify the rule to publicly post information related to complaints, because this data contains individual account information and other private customer data. However, the commission notes that aggregate complaint data is available on the commission’s website, and information related to docketed enforcement actions is accessible on the filing interchange.

General Comments – REP complaint reporting – “The commission declines to modify how complaints are reported by the commission as requested by NEC. The commission agrees that there are instances in which complaints without substantive merit are filed, but this is a risk that is born equally by all REPs. As customer service entities, it is the prerogative of each REP to provide service and information to its customers in a manner that best serves those customers and minimizes the risk of such mistakes occurring. Furthermore, the number of complaints received, and the number of violations found measure different variables and provide different insights into the performance of the REP. Finally, the way the commission reports complaints is beyond the noticed scope of this rulemaking proceeding.”

Proposed §22.242(c)(2) – Direct Reports to Enforcement – “The commission agrees with OPUC and Consumer Commenters that there are issues that are not appropriate for informal resolution. To restore the requested provision in the absence of a formal complaint process, the commission modifies the rule such that a complainant can request OCA issue a closing letter and refer the complaint to DICE without informal resolution if the complaint meets one of the existing exceptions or for other good cause. This provides the OCA with the discretion to identify instances where its involvement is not likely to produce a successful resolution and allows the complainant to pursue other remedies. The closing letter will allow the complainant to demonstrate that they have exhausted their administrative remedies and allow them to pursue other legal action and the referral to DICE will allow enforcement staff to investigate the issue for potential compliance issues.

“With regards to SPS’s request for notice, timelines, and an opportunity to respond, the commission declines implement the specific modifications requested by SPS. Under the amended rule, OCA will issue a closing letter when a complaint bypasses informal resolution, which will serve as notice to the regulated entity, in addition to separate contacts from DICE if it elects to open an investigation. A regulated entity will generally have an opportunity to discuss any matters under investigation with DICE, as previously discussed. This addresses SPS’s stated concerns. With regards to timelines, the commission declines to impose a timeline on DICE for reasons previously discussed.”

Proposed §22.242(d) – Termination of informal resolution – “The commission modifies language describing referrals to DICE to read: “If the Office of Consumer Assistance identifies a possible violation, the Office of Consumer Assistance will, after closing the complaint, refer the complaint and record to the commission’s Division of Compliance and Enforcement for review.” This revision addresses the commenters’ concern with the proposed use of the term “suspects.” It also clarifies that a referral is only required for a “possible violation,” which addresses SPS’s concern that a referral will be construed as a determination that a violation occurred.

The commission declines to require notice when a complaint is being referred to DICE for review because it is unnecessary. Under the amended rule, OCA will issue a closing letter that, among other things, will indicate whether it identified a possible violation, which is also the standard for referring a complaint to DICE for review. As described above, the regulated entity will also typically receive a contact from DICE when it opens an investigation. Further, any formal enforcement action brought by DICE will provide the regulated entity with notice and all other procedural rights required by law.

The commission disagrees, however, with the general premise that internal transfers of information between OCA and DICE implicate the rights of regulated entities. As previously described, DICE already performs a period review of the complaint database, including complaints that are flagged by OCA for further review. Under PURA § 14.002, “the commission shall adopt and enforce rules reasonably required in the exercise of its power and jurisdiction” and under the Texas Water Code § 13.041(b) the “utility commission shall adopt and enforce rules reasonably required in the exercise of [its] powers and jurisdiction.” The commission’s authorizing statutes each charge the commission with enforcing its rules, which is most important when there are directly-affected customers. The language in this rule represents the minimum standard for when OCA will refer a complaint to DICE for review, not a strictly defined and exclusive standard. For example, if a regulated entity receives multiple complaints alleging related issues, even if there is not enough evidence in any single complaint to conclude that there is a possible violation or specific nature of the violation is unclear, OCA may still elect to notify DICE of a possible issue.”

These proposed rules are intended to implement Texas Water Code Chapter §13.5051 as enacted by Senate Bill (SB) 790 during the Texas 89~h Regular Legislative Session and Texas Water Code §13.153 as enacted by SB 1778 during the Texas 88th Regular Legislative Session. The proposed rules are aimed at streamlining the commission’ s complaints process for all utilities under the commission’ s jurisdiction and bring the commission’ s complaint process in line with the processes of other agencies across the state. These proposed rules allow, upon customer request, a retail public utility to initiate, transfer, or terminate a customer’s retail water or sewer service.

Note that in this matter, the commission clarifies that any reference to an “informal” complaint or complaint process is a reference to the process whereby the OCA investigates an individual’ s complaint against an entity under the commission’ s jurisdiction to evaluate whether a possible violation of commission rule has taken place and assists the parties in coming to an informal resolution. For example, if a consumer and a service provider disagree as to whether a charge was properly applied to the consumer’s bill, an investigator from the OCA will review the commission’ s substantive rules and any available documentation, communicate with both parties, and attempt to reach an agreement between the complainant and the regulated entity as to whether the charge was appropriate and whether any additional action, such as a refund, is required by commission rule.

At the conclusion of the complaint resolution process, the OCA will provide the complainant and the regulated entity with a closing letter with a summary of the complaint, any known remedial actions that were taken, and an assessment of whether the available documentation suggests the regulated entity may have committed any violations of commission rules. Critically, this is not a formal legal decision made by the commission. Historically, this process successfully resolves a significant majority of complaints. By contrast, any reference to a “formal” complaint or complaint process is a reference to a contested case proceeding in which an individual complainant submits a complaint against an entity under the commission’s jurisdiction for formal adjudication. A formal complaint is docketed, usually referred to the State Office of Administrative Hearings (SOAH) for a hearing, and concludes with a binding legal determination in the form of a final order by the commission. At the conclusion of the formal complaint process, including any motions for rehearing, if either party is unsatisfied with the result, they can appeal the commission’s decision in a court of proper jurisdiction.