Texas Coalition for Affordable Power http://tcaptx.com Make a Powerful Choice™ Thu, 02 Jul 2015 20:46:28 +0000 en-US hourly 1 Low-income Texans expected to receive $50 electric bill discounts http://tcaptx.com/policy-and-reform/low-income-texans-expected-to-receive-50-electric-bill-discounts http://tcaptx.com/policy-and-reform/low-income-texans-expected-to-receive-50-electric-bill-discounts#comments Wed, 01 Jul 2015 16:33:58 +0000 http://tcaptx.com/?p=11684 Low-income Texans can expect help in their electric bills, thanks to House Bill 1101.

Low-income Texans can expect help in their electric bills, thanks to House Bill 1101.

About $52 — that’s how much money low-income Texans can expect to save on their electric bills each month for an entire year under a proposal before regulators on Thursday.

The discounts will flow through August 2016 and reduce bills by nearly five cents per kilowatt hour.  Action taken recently by the Texas Legislature — in particular the adoption of House Bill 1101 by state Rep. Sylvester Turner, a Houston Democrat — make the discounts possible.

The legislative action also ensures than a quarter billion dollars already collected for the low-income discounts are not diverted elsewhere.  The Texas Coalition for Affordable Power, a leading advocate for House Bill 1101, called that bill the most important this year for electric customers.

“These discounts provide a great service to low-income electric consumers,” said TCAP executive director Jay Doegey. “The legislation that made it possible also is great policy. It ensures that money collected from ratepayers for a declared purpose is used for that purpose. And in this case, the money helps the neediest among us to pay their light bills.”

Rep. Sylvester Turner

Rep. Sylvester Turner

While the Texas Public Utility Commission already administers a discount program, that program would have abruptly ended next month absent legislative action. Under HB 1101, the three PUC commissioners must still set the amount of the discounts and agree to other details — actions the commissioners could take during their regular meeting on Thursday.

Money for the low-income program comes not from tax dollars, but through fees previously paid by electric users statewide. Those fees flowed into a special government fund — the System Benefit Fund — that was created as part of delicate negotiations with consumer groups during the adoption of the 1999 electric deregulation law.

But the Texas Legislature over the years held back much of the money, using it not for rate discounts but for budget balancing purposes. In 2013 the Legislature voted to end the System Benefit Fund for good, but also to expend the accumulated balance on rate discounts.

The 2013 authorization expires at the end of August, even though there still remains unspent more than $226 million.  Without Turner’s bill and related appropriations legislation, the accumulated balance very likely would have been diverted to other purposes.

Turner’s legislation also changes how the discounts are applied. Under previous rules, the discounts could only be applied for five months and could not exceed 15 percent of a given bill. Turner’s bill lifts that cap and allows low-income Texans to receive the discounts for 12 months.

Thursday’s proposal at the PUC would set the discount at approximately 31 percent. PUC officials have said that the discount may be adjusted upward or downward during the year, depending on variables such as participation in the low-income discount program and the weather.

If money remains unspent in the System Benefit Fund beyond August 2016, House Bill 1101 allows the discounts to extend as far as August 2017.

An electric customer qualifies for the discount if the customer receives Medicaid and SNAP benefits, or if the customer’s household income is at or below 125 percent the standard included in federal poverty guidelines. Only customers in areas of the state with retail electric deregulation qualify.

The Public Utility Commission has more information on their website, which can be found here.

What is the Texas Coalition for Affordable Power?

TCAP is a coalition of more than 160 cities and other political subdivisions that purchase electricity in the deregulated market for their own governmental use. Because high energy costs can impact municipal budgets and the ability to fund essential services, TCAP, as part of its mission, actively promotes affordable energy policies. High energy prices also place a burden on local businesses and home consumers.

 

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Company Faces Penalty for Improperly Cutting Power During Cold Weather http://tcaptx.com/regulatory-action/company-faces-penalty-for-improperly-cutting-power-during-cold-weather http://tcaptx.com/regulatory-action/company-faces-penalty-for-improperly-cutting-power-during-cold-weather#comments Wed, 17 Jun 2015 21:29:56 +0000 http://tcaptx.com/?p=11592 ColdWeatherMeterOuch! Direct Energy, a retail electric provider popular in Texas, faces a $220,000 penalty for initiating service disconnections during two extreme weather events last year.

Cutting power to consumers during weather emergencies — even if those customers have fallen behind in their bills — is generally prohibited under Public Utility Commission rules.

But according to documents filed at the PUC, Direct Energy initiated disconnections during an extreme weather emergency on Feb. 6, 2014 against 69 customers who apparently fell behind in their bills. It initiated another 183 disconnections during an extreme weather emergency on Feb. 11, 2014, according to documents.

Apparently, only 10 of the initiated disconnections were actually completed. Direct Energy told regulators that the disconnections were the result of administrative errors, and has agreed to pay the $220,000 settlement, according to the PUC documents. The company also said it has increased staffing and retrained existing employees to avoid similar problems in the future.

“Due to an administrative error, Direct Energy sent disconnection requests to the (transmission and distribution provider) during a weather moratorium, resulting in the disconnection of ten customers,” the company said in a prepared statement. “Direct Energy regrets this incident, and has cooperated fully with the Public Utility Commission of Texas during the investigation.”

The company statement appeared on the website of energychoicematters.com, which reports on electricity issues nationwide. The settlement still requires approval by PUC commissioners.

— R.A. Dyer

What is the Texas Coalition for Affordable Power?

TCAP is a coalition of more than 160 cities and other political subdivisions that purchase electricity in the deregulated market for their own governmental use. Because high energy costs can impact municipal budgets and the ability to fund essential services, TCAP, as part of its mission, actively promotes affordable energy policies. High energy prices also place a burden on local businesses and home consumers.
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84th Texas Legislature: Good News & Bad News for Energy Consumers http://tcaptx.com/policy-and-reform/84th-texas-legislature-good-news-bad-news-for-energy-consumers http://tcaptx.com/policy-and-reform/84th-texas-legislature-good-news-bad-news-for-energy-consumers#comments Mon, 08 Jun 2015 15:53:30 +0000 http://tcaptx.com/?p=11531 Texas CapitolNearly a quarter billion dollars in rate discounts will continue flowing to 530,000 low-income Texans under legislation adopted last month in Austin. That bill — assuming Gov. Greg Abbott signs it into law — will represent the biggest victory of the 84th Legislative Session for Texas energy consumers.

 But not all the news is so rosy. The session ended June 1, but unfortunately not before consumers suffered a number of setbacks.

Just below is a list of five important bills, and whether we view the corresponding fate of each as good news or bad news for Texas energy customers.  The thumbs up and thumbs down symbols reflect consumer wins and losses, not the merits of the bills themselves. That means a good bill (such as HB 3749) could receive a “thumbs down”  by failing to win adoption. Similarly,  a potentially harmful bill would receive a “thumbs up”  if it failed to pass.

thumbs-up-icon  House Bill 1101, by state Rep. Sylvester Turner, will provide more than $200 million in assistance to low-income ratepayers. Funding for this program comes not from tax dollars, but from fees we’ve already paid on our electric bills. This legislation ensures that money collected from Texans for one purpose is not diverted to another. HB 1101 also helps the neediest among us to pay their light bills. It was approved by both the House and Senate and Gov. Greg Abbott signed it June 17th.

thumbs-up-icon House Resolution 3425 would have delayed for several years an intensive review of the Texas Railroad Commission, which is the state agency that oversees gas utility rates. The resolution emerged unexpectedly during the waning days of the session, passed in the Senate, but then died in the Texas House. Its death came as good news to several lawmakers, consumer groups and city coalitions — each of whom have called for agency reform.

thumbs-down-iconHouse Bill 3749, by Rep. Jim Keffer, would have helped preserve the ability of cities to protect their citizens’ interest in gas utility cases.  It was supported by consumer and city groups, but failed to emerge from the Texas House. We view that as bad news for anyone who pays a gas bill.

thumbs-down-icon House Bill 2254, also by Rep Sylvester Turner, would have prohibited electric companies from applying minimum use fees on home bills. These fees are quite common. They’re also one of the most annoying gotchas in the retail electric market. Despite his best efforts, Rep. Turner couldn’t get this one out of committee.

thumbs-down-iconSenate Bill 777, by Sen. Troy Fraser, would have given the Texas Public Utility Commission more tools to crack down on bad actors in the state’s retail electric market. This bill had the support of the PUC and the Texas Coalition for Affordable Power. It emerged from the Senate, but died in the House.

— R.A. Dyer

What is the Texas Coalition for Affordable Power?

TCAP is a coalition of more than 160 cities and other political subdivisions that purchase electricity in the deregulated market for their own governmental use. Because high energy costs can impact municipal budgets and the ability to fund essential services, TCAP, as part of its mission, actively promotes affordable energy policies. High energy prices also place a burden on local businesses and home consumers.

 

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Jay Doegey takes reins at TCAP http://tcaptx.com/press-releases/jay-doegey-takes-reins-at-tcap http://tcaptx.com/press-releases/jay-doegey-takes-reins-at-tcap#comments Fri, 05 Jun 2015 16:21:52 +0000 http://tcaptx.com/?p=11504 Jay Doegey

Jay Doegey

Former city attorney Jay Doegey, a Navy veteran with more than 35 years of experience in municipal government, has been named executive director of the Texas Coalition for Affordable Power.

With his appointment, Mr. Doegey returns to an organization over which he previously served as board president. He replaces outgoing executive director Randy Moravec, who retired from TCAP in May.

“We’re so very pleased to have Mr. Doegey back,” said current TCAP board president Miles Risley. “He knows this organization inside and out. He brings to the job invaluable wisdom and years of experience. Welcome back Jay!”

TCAP is comprised of 169 cities and other political subdivisions that have joined together to purchase power in bulk for their own governmental use. Formed in 2011 through the merger of two predecessor organizations — the Cities Aggregation Power Project and the South Texas Aggregation Project — TCAP is the largest and most successful coalition of its kind in the state.

Mr. Doegey served as TCAP board president from 2011 until 2014. He also served as board chairman for one of its predecessor coalitions — the Cities Aggregation Power Project — as well as board chairman for several other city coalitions. Mr. Doegey likewise served for 25 years as city attorney for Arlington, Texas, and 23 years on active duty and the reserves in the U.S. Navy. He retired as a captain.

“I look forward to working again with TCAP,” said Mr. Doegey. “Together, TCAP cities purchase more than 1.3 billion kilowatt hours of electricity each year. That’s power for street lights, water pumps, city buildings and other municipal uses. It’s a great organization and I’m proud to be a part of it.”

Dr. Moravec, the outgoing executive director, assumed that position in 2011 — shortly after the formation of TCAP. Over the course of Dr. Moravec’s tenure, the coalition added 11 new members and distributed millions of dollars in rebate checks.

“We’re so very grateful for Randy’s tireless work on behalf of TCAP cities and their citizens,” said Mr. Risley, the current TCAP board president. “Randy has contributed his time and energy to this organization from its beginning — directing member services, crafting strategy and helping to make TCAP the most important coalition of its kind in Texas.”

Prior to his years as TCAP executive director, Dr. Moravec served as Finance Director for the Township of Addison. He received his PhD in public affairs from the University of Texas-Arlington in 2011, and has more than 35 years of experience in municipal finance.

“I’m deeply honored to have served as TCAP’s first executive director,” said Dr. Moravec. “This is an important organization that works hard to save money for Texans. TCAP wants what all Texans want: a well-functioning electricity market that encourages economic development for our cities and a better life for our citizens. I’m happy to have been part of that effort.”

TCAP members include Abilene, Addison, Arlington, Belton, Corpus Christi, Frisco, Grand Prairie, Grapevine, Harlingen, Kingsville, Mansfield, McAllen, Midlothian, Odessa, Pearland, Plano, Port Aransas, San Angelo, South Padre Island, Sugar Land, Texas City, Vernon, Victoria, Wichita Falls, as well as many other cities and political subdivisions.

What is the Texas Coalition for Affordable Power?

TCAP is a coalition of more than 160 cities and other political subdivisions that purchase electricity in the deregulated market for their own governmental use. Because high energy costs can impact municipal budgets and the ability to fund essential services, TCAP, as part of its mission, actively promotes affordable energy policies. High energy prices also place a burden on local businesses and home consumers.

 

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UPDATE: Gov. Abbott signs HB 1101 favoring Electric Customers, Government Accountability http://tcaptx.com/press-releases/key-legislation-a-big-win-for-electric-customers-government-accountability http://tcaptx.com/press-releases/key-legislation-a-big-win-for-electric-customers-government-accountability#comments Wed, 03 Jun 2015 16:30:44 +0000 http://tcaptx.com/?p=11488 Nearly a quarter billion dollars in electricity rate discounts will continue flowing to more than 500,000 low-income Texans under crucial consumer legislation adopted in Austin.

The legislation, House Bill 1101, also strikes a blow for governmental accountability. Without HB 1101 or related legislation, money specifically collected from Texans for the rate discounts likely would be diverted to an unrelated purpose.

Sylvester Turner

Sylvester Turne

The Texas Coalition for Affordable Power, an organization that strongly advocated for the adoption of House Bill 1101, called for Gov. Greg Abbott to sign the legislation. He did so June 17th. House Bill 1101 was authored by outgoing state Rep. Sylvester Turner, a longtime advocate for energy consumers and low-income Texans.

“This is hands down this legislative session’s most important bill for Texas electricity consumers,” said TCAP policy analyst R.A. Dyer.  “We want to thank Rep. Turner for his leadership on this issue and we want to thank Gov. Abbott for signing the bill. House Bill 1101 is a big win for electric ratepayers and a big win for fairness and accountability.”

Money for the discounts comes not from tax dollars, but through fees paid by electric users statewide. Those fees flowed into a special government fund — the System Benefit Fund — that was created as part of delicate negotiations with consumer groups during the adoption of the 1999 electric deregulation law.

But the Texas Legislature over the years held back much of the money, using it not for rate discounts but for budget balancing purposes. In 2013 the Legislature voted to end the System Benefit Fund for good, but also to expend the accumulated balance on rate discounts.

That 2013 authorization expires at the end of August, even though there still remains unspent more than $226 million.  Without Turner’s bill or similar legislation, the discounts would end in August and the accumulated balance very likely diverted to other purposes. With Turner’s bill, the rate discounts will continue flowing — potentially through August 2017.

“This is great news for low-income electric consumers,” said Dyer, of TCAP. “It’s important that money collected from ratepayers for a declared purpose is used for that purpose. And in this case, the money helps the neediest among us to pay their light bills.”

An electric customer qualifies for the discount if the customer receives Medicaid and SNAP benefits, or if the customer’s household income is at or below 125 percent the standard included in federal poverty guidelines. The size of future discounts under House Bill 1101 remains unclear, although they likely will exceed 15 percent on a typical bill. Only customers in areas of the state with retail electric deregulation qualify.

The Public Utility Commission has more information on their website, which can be found here.

What is the Texas Coalition for Affordable Power?

TCAP is a coalition of more than 160 cities and other political subdivisions that purchase electricity in the deregulated market for their own governmental use. Because high energy costs can impact municipal budgets and the ability to fund essential services, TCAP, as part of its mission, actively promotes affordable energy policies. High energy prices also place a burden on local businesses and home consumers.

 

 

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Report: “Demand Response” Holds Key to $200 Million in Electric Savings http://tcaptx.com/policy-and-reform/report-demand-response-holds-key-to-200-million-in-electric-savings http://tcaptx.com/policy-and-reform/report-demand-response-holds-key-to-200-million-in-electric-savings#comments Fri, 22 May 2015 22:11:49 +0000 http://tcaptx.com/?p=11396 SPEERMore than $200 million — that’s the amount all Texans could have saved if a modest number of them had reduced their electric consumption for only five days in 2012 and 2013, according to a new report.

An advocacy group known as SPEER (also known as South-central Partnership for Energy Efficiency as a Resource) found in a report released this week that several expensive-to-operate power plants could have remained idle if some Texans had reduced their power demand during a few hours on certain key days.  Avoiding the use of those expensive-to-operate power plants would lead to substantial overall electricity savings, according to the report.

SPEER conducted its analysis by reviewing historical data provided by the Electric Reliability Council of Texas, the organization that operates the state’s primary electricity grid.

“Data available from ERCOT allowed us to accurately estimate the savings for these two recent mild years,” said Doug Lewin, SPEER Executive Director.  “Savings in more extreme weather years such as 2011 would be significantly higher.”

SPEER notes that billions of dollars have been spent on automated meters that — at least potentially — could allow Texans to control their electricity consumption during key periods. But customer participation in “demand response” programs to make use of that functionality remains modest.

Two bills considered during the ongoing legislative session would have helped promote the sort of programs championed by SPEER. They are House Bill 3343 by Rep. Sylvester Turner and Senate Bill 1284 by Sen. Kirk Watson. Both bills are stuck in committee and appear dead.

SPEER advocates for the creation of energy efficiency products in Texas and Oklahoma. The organization’s new report can be found here.

— R.A. Dyer

 

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Memorial Day Weekend: Sales Tax Holiday on Energy Efficiency Products http://tcaptx.com/policy-and-reform/memorial-day-weekend-sales-tax-holiday-on-energy-efficiency-products http://tcaptx.com/policy-and-reform/memorial-day-weekend-sales-tax-holiday-on-energy-efficiency-products#comments Thu, 21 May 2015 20:10:48 +0000 http://tcaptx.com/?p=11387 EnergyStarLogoAttention Texas shoppers: there’s good news this weekend for anyone in the market for an energy efficiency product.

The Texas Comptroller’s office has announced a sales tax holiday through May 25th on certain energy efficiency products. Those products that qualify will have an “Energy Star” logo affixed to them. The tax holiday begins at 12:01 a.m. (after midnight) on Saturday, May 23.

You can purchase any number of qualifying items under the sales tax holiday — and there’s also no requirement for an exemption certificate. Qualifying products include:

  • Air conditioners priced at $6,000 or less
  • Refrigerators priced at $2,000 or less
  • Ceiling fans
  • Incandescent and fluorescent light bulbs
  • Clothes washers
  • Dishwashers
  • Dehumidifiers
  • Programmable thermostats with Energy Star label.

The Energy Star logo may appear on the appliance, the packaging or the Energy Guide label. The logo means the product meets strict energy efficiency guidelines, set by U.S. Environmental Protection Agency and the U.S. Department of Energy. Click here for more information.

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84th Texas Legislative Update: Live Bills, Dead Bills and Those In Between http://tcaptx.com/policy-and-reform/84th-texas-legislative-update-live-bills-dead-bills-and-those-in-between http://tcaptx.com/policy-and-reform/84th-texas-legislative-update-live-bills-dead-bills-and-those-in-between#comments Wed, 13 May 2015 21:38:05 +0000 http://tcaptx.com/?p=11331 Texas CapitolJust a few weeks remain in the 84th legislative session, and with each passing day more bills die. We’re keeping an eye on the process. Here’s a quick update about a few bills of interest to energy consumers — and whether those bills are alive, dead or somewhere in between.

Keeping A Promise to Ratepayers  Texans for years have paid a small assessment on their electric bills to finance rate discounts for those of limited means. In 2013 the Texas Legislature voted to end those assessments and to discontinue the discount program after the last funds were spent.  Legislation by Rep. Sylvester Turner, House Bill 1101, continues that promise by ensuring that dollars already collected for the rate discounts are spent for that purpose.  The legislation, which is supported by the Texas Coalition for Affordable Power, has been adopted by the Texas House and will be considered Tuesday, May 19th, in the Senate Finance Committee.

Worst-Named Agency? It’s been said that the Texas Railroad Commission is the worst-named agency in the state. The agency has absolutely no authority over railroads, but rather oversees the oil and gas industry and regulates home gas utility service. But House Bill 1106,  which would have changed the agency’s name to the Texas Energy Commission, stalled in the House Calendars Committee and died.

No support for Hike & Bike Trails – Senate Bill 1444, by Sen. Larry Taylor, could have facilitated the use of utility right-of-way for the creation public hike-and-bike trails. But the legislation, which would have provided a relatively inexpensive method to create more public recreational areas, has stalled in the Senate. Companion legislation, House Bill 2184 by Rep. Rick Miller, also stalled in the House. Both bills now appear dead.

Minimum Use Fees to Continue? A savvy electric consumer – even one that pays attention to price and contract terms – can still get stuck paying unexpected fees. Perhaps the most annoying are “minimum use” fees. These punish ratepayers who try to save money by reducing their electric use.  Rep. Sylvester Turner proposed House Bill 2254 to prohibit minimum use fees. Unfortunately it stalled in the House State Affairs committee, where it should be now pronounced dead.

Cutting the Lights to the NSA? House Bill 3916, by state Rep. Jonathan Stickland, prohibits cities from providing water or electric utility service to a federal agency that “that is involved in the routine surveillance or collection and storage of bulk telephone or e-mail records … concerning any citizen of the United States.”  House Bill 3916 never made it out of the House State Affairs Committee. So, lights out for HB 3916.

— R.A. Dyer

What is the Texas Coalition for Affordable Power?

TCAP is a coalition of more than 160 cities and other political subdivisions that purchase electricity in the deregulated market for their own governmental use. Because high energy costs can impact municipal budgets and the ability to fund essential services, TCAP, as part of its mission, actively promotes affordable energy policies. High energy prices also place a burden on local businesses and home consumers.

 

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ERCOT, “Peaker Net Margin” and Electric Prices: Why It Matters http://tcaptx.com/policy-and-reform/ercot-peaker-net-margin-and-electric-prices-why-it-matters http://tcaptx.com/policy-and-reform/ercot-peaker-net-margin-and-electric-prices-why-it-matters#comments Tue, 12 May 2015 18:17:55 +0000 http://tcaptx.com/?p=11303 Ercot_logo

The Electric Reliability Council of Texas oversees the state’s primary power grid.

Here’s a bit of interesting news for Texas energy consumers.  It’s a bit wonky, so stick with us.

On April 14th, an independent expert announced that wholesale electric prices in Texas have dropped this year, as compared to what they were in 2014.

Lower wholesale prices mean generators make less money, but also probably mean lower retail prices.  So the announcement — which was made during a board meeting of ERCOT, the organization that oversees the state’s primary power grid — should come as good news for ratepayers.

Here’s where it gets wonky. The announcement also prompted an important discussion at ERCOT about the assumptions it uses when monitoring the state’s power market.  Changing those assumptions could impact how much we all pay for electricity.

The independent expert who addressed ERCOT said the drop in wholesale power prices means that certain key generators make less money. The relative profitability of these generators is described with the term “Peaker Net Margin.”  A high Peaker Net Margin means the key generators — “peaking” plants — are making lots of money. A low Peaker Net Margin means they’re making less.

Historically, some experts have deemed a relatively high “Peaker Net Margin” as an indicator of a healthy wholesale power market. But as a consequence of the announcement on April 14th, ERCOT board members have begun questioning that assumption.

That is, how is it possible that wholesale prices are down, and Peaker Net Margin has been relatively low in recent years — and yet the ERCOT market has remained consistently healthy?  The independent expert who addressed ERCOT raised similar questions, and even acknowledged that Peaker Net Margin is a “simplistic look-back tool.”

Why should you care? Because big generation companies who have clamored for very expensive changes to the wholesale power market point to the state’s relatively low Peaker Net Margin to bolster those claims. They want regulators to approve a system whereby they can collect billions of dollars in subsidies from ratepayers. In theory, these subsidies would increase Peaker Net Margin.

So it should come as good news if ERCOT places less emphasis on this “simplistic look-back tool” when judging the relative health of the power market. Placing a lower emphasis on Peaker Net Margin also coincides with views held by the Texas Coalition for Affordable Power, which has previously questioned PNM’s validity as an indicator of market health.

For instance, TCAP has noted that Peaker Net Margin does not account for various other ways power companies make money, such as selling power through private “bilateral” contracts.  Additionally, Peaker Net Margin fails to consider that many generation companies own fleets of plants that include non-peaking, low-cost plants that provide cost benefits that peaking plants do not.

— R.A. Dyer

What is the Texas Coalition for Affordable Power?

TCAP is a coalition of more than 160 cities and other political subdivisions that purchase electricity in the deregulated market for their own governmental use. Because high energy costs can impact municipal budgets and the ability to fund essential services, TCAP, as part of its mission, actively promotes affordable energy policies. High energy prices also place a burden on local businesses and home consumers.

 

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Study: Automatic Bill Payment Programs Cost Money, Increase Consumption http://tcaptx.com/rates-and-service/automatic-bill-payment-costing-you-money http://tcaptx.com/rates-and-service/automatic-bill-payment-costing-you-money#comments Fri, 08 May 2015 20:57:23 +0000 http://tcaptx.com/?p=11268 meterLooking to cut your electric consumption?  One way to do so — and save money to boot — is to avoid automatic bill payment programs.

That’s the conclusion of Duke University economist Steven Sexton, who finds in a new peer reviewed study that enrollment in automatic bill payment programs can increase residential electricity consumption by 4 percent to 6 percent.

For commercial customers, consumption increased by 7.3 percent to 8.1 percent, he found.

“Inattention to accounts serviced by (automatic bill payment) programs may increase — reducing the price salience of products,” Sexton wrote in his report. He said this potentially prompted energy consumption “above levels that would be chosen with full attention to price.”

The report appears in the May 2015 edition of the Review of Economics and Statistics. You can view it here.

Sexton examined monthly consumption by residential and commercial customers of a South Carolina electric utility over a 16-year period.  The researcher reviewed data from 658,000 residential accounts and 167,500 commercial accounts, looking specifically at consumption before and after customers joined automatic-payment programs.

Extrapolating from that data, Sexton calculated that automatic bill payment programs induced nearly 16 billion kilowatt-hours of incremental consumption in the United States in 2010. That incremental consumption resulted in an aggregate cost of $1.8 billion.

Automatic bill payment plans also led to an incremental addition of 8.6 metric tons of carbon dioxide emissions, at a social cost of $181 million, according to Sexton’s calculations.

Sexton found even more incremental consumption — 9.4 percent — among customers with energy efficient homes. He speculated that such customers may believe they already consume electricity in an efficient manner, and so are “even less disposed to view electricity bills than standard homeowners.”

He likewise found that programs that help low-income customers smooth the seasonal variation in their monthly bills results in a 6.7 percent increase in electric use.

One way to encourage more efficient energy usage by automatic bill payment customers is to require them to complete monthly transactions online, wrote Sexton. That is, utilities can remove some of the automatic-ness of automatic payment programs.

In this way, “the customer has to at least look at the bill before the payment is transmitted,” he wrote.

— R.A. Dyer

What is the Texas Coalition for Affordable Power?

TCAP is a coalition of more than 160 cities and other political subdivisions that purchase electricity in the deregulated market for their own governmental use. Because high energy costs can impact municipal budgets and the ability to fund essential services, TCAP, as part of its mission, actively promotes affordable energy policies. High energy prices also place a burden on local businesses and home consumers.

 

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