Texans Endure Second Highest Electric Rate Increases in continental United States

Feel like you're paying too much for electricity? If you live in Texas, you're probably correct. Just consider the above chart, which is taken from easy-to-find data posted at the United States Energy Information Administration website. It shows that within the continental United States, only residents of Massachusetts have suffered greater rate hikes.

Specifically, the chart compares electric prices in 1999, which is the year that Texas adopted its deregulation law, to electric prices in 2008, which is the last year for which the federal government has complete annual pricing data. The chart includes pricing data for all states within the continental United States and the District of Columbia.

The first startling fact: only Massachusetts has had larger price increases than Texas. And remember, this is for the period after Texas adopted its deregulation law. Far from keeping a lid on prices, deregulation in Texas appears to have made prices worse.

The second startling fact: price increases in Texas exceed even those among deregulated states generally. Note the second green bar. That's the average rate increase only among deregulated states. The average increase in Texas is far greater. This would suggest that the Texas deregulation law has been less successful than deregulation elsewhere.

Here's the third startling fact: electric prices also have increased more in Texas than they have in other states with a similar reliance on natural gas to fuel generation plants. Many proponents of the status quo have blamed high electric prices in Texas on natural gas price volatility. But this data suggest the current system is exacerbating that effect, not making it better.

The Cities Aggregation Power Project supports those reforms that enhance competition while improving customer protection. Texans can and should pay less for electricity.

-- R.A. Dyer

How to defend higher rates: the Fruit Salad Approach

Some industry groups have taken the fruit salad approach in an attempt to mask the poor performance of the state's deregulated electricity market. That is, first these groups will compare apples to oranges by reviewing average rates on the one hand to lowest-cost offers on the other. Then they cherry-pick misleading and often flatly incorrect data to make their point.

To be clear, residential electricity rates consistently were below the national average for years before the deregulation law, and have remained consistently ABOVE the national average after restructuring. As you can see from the chart above, this trend has not changed.

Industry-sponsored studies typically will compare recent prices under deregulation to prices during 2001 -- that is, the last year before deregulation took effect in Texas. They argue that such a comparison supports their contention that residential rates have not increased under the Texas deregulation law relative to rates in the rest of the nation.

Unmentioned in these industry "studies" is the fact that rates in 2001 were then spiking above typical levels and that this spike itself was a function of deregulation. That is, it was in that year that the Texas Public Utility Commission allowed utilities to assess various charges on ratepayers as a sort of down payment on later collections anticipated from the restructuring law. The 2001 rates were inflated because of deregulation.

A quick check at the United States Energy Information Administration website shows that Texas residential consumers continue paying above the national average. For instance, in October of 2009 (which is the last month for which the federal government has relevant data), the average residential rate nationwide was 11.76 cents per kw/h. Meanwhile the rate in Texas during that same month was 12.26 cents -- or about 4 percent higher. By comparison, Texas rates were nearly 7.5 percent LOWER than the national average in 1999, which was the year that lawmakers adopted the deregulation law.

Moreover, the most current US EIA data shows that Texas residential rates are more than 18 percent higher than those in neighboring Oklahoma and a whopping 50 percent higher than those in Louisiana. Both states use a similar fuel mix to power their generators, but never deregulated their markets.

CAPP believes in market reforms that enhance competition while improving customer protections. Texans can and should pay less for electricity. But the first step is to acknowledge that we can do better.

-- R.A. Dyer

Proposed Meter Tampering Rules: A Thorny Issue for Consumers

The Public Utility Commission is currently considering new rules relating to a very important and thorny issue: meter tampering. That is, on occasion a private individual may improperly disconnect, rewire or otherwise alter an electric meter in such a way as to reduce its usage measurements.

It's an important issue for electric companies because meter tampering can result in a loss of revenue. As such, some companies want the PUC to grant them wider discretion to backbill customers with tampered meters.

And with the advent of advanced meters, such backbilling has become a much easier proposition for utilities. But it's also true that a back-billed customer may have had nothing to do with the tampering — in fact, that customer may have moved onto the property after the tampering occurred, or the meter may have malfuctioned for unrelated reasons. That's why this issue is so thorny for home consumers.

A related issue involves so-called “switch-holds,” which would prohibit customers from changing retail electric providers until that customer has paid for charges relating to alleged meter tampering. Also, the Texas Apartment Association is seeking notification of meter tampering on rental properties. This presents privacy concerns for residents, especially residents who may have moved in after the tampering occured.

Comments from interested parties have been filed at the Commission, which will likely soon make a decision. You can read some of the comments here.

-- Eileen McPhee

Oncor's Controversial Meters: An Expensive History

Killeen residents continue giving Oncor an earful about their new advanced meters and high electric bills. Oncor has blamed a recent cold snap -- and not the new meters – as the likely culprit for high bills. Lost in the debate, however, is the controversial history associated with Oncor’s meters, which are costing its customers about $2.22 per month.

Consider that Oncor began charging its customers for the advanced meters in early 2009 even though hundreds of thousands of its customers already had automated meters. That is, the company’s “new” automated meters are replacing hundreds of thousands of similarly “new” automated meters — and its customers have to pay for both.

The company is prematurely yanking out the earlier generation of automated meters because they were installed without meeting state standards. These meters have been characterized as “white elephants” in a recent Dallas Morning News report. The cost to Oncor customers for pulling out these meters? More than $90 million.

This means that Oncor customers are paying twice for automated meter service: for the meters the company installed just a few years back (and are now yanking out) and the meters that it recently began installed around Killeen and elsewhere.

Also unnoted in the recent reports is that Oncor recently hiked its system-wide rates by a $115 million annually. That rate hike began increasing customer bills late last year. It includes the cost of the white elephants.

-- R.A. Dyer

Killeen Residents Angered by Electric Service

Judging from this TV report, folks in Killeen appear to be a bit up in arms about their electric service. City officials there report numerous complaints in recent weeks -- mostly from residents who have suffered poor service or who have received unexpectedly high electric bills.


"I've had complaints, where the citizens have called (the electric company), and they're telling me that they're being hung up on,” said Mayor Timothy Hancock, as reported by Killeen’s Channel 25 News. The mayor added that Killeen residents are “not getting any response and they're being told ‘that's just the way it is.’”

The TV report also noted that a representative of the North Texas transmission and distribution utility, Oncor, addressed some of the complaints -- but also told council members that the company could not speak on behalf of the separate retail electric providers that issue bills. By contrast, in areas outside deregulation only one entity typically handles billing, service and customer complaints.

City Manager Connie Green said the city will do whatever it can to reduce confusion and help its residents. "We will contact that retail electric service provider and let them know that we are not happy with the treatment of our citizens," he said.

-- R.A. Dyer