Mission Statement —

The vision of TCAP is to proactively and strategically promote an affordable market for power procurement through advocacy and education

Guiding Tenets —

• Treat all members fairly regardless of size or kWh load
• Never take your eye off the market (always be aware of the market)
• Maintain stability and best value
• Purchase and supply electricity at the most affordable price
• Be a leading authority and engaged in the industry on legislative, educational, informational, technological and market matters
• Be mindful of who our customers are
• Be an advocate for consumers/citizens
• Continue the growth of the organization-one city at a time
• Recognize and respond to the diverse energy needs of our customers
• Be a “one-stop shop” for energy market needs for our members
• Cultivate relationships with other organizations (HGAC, etc.) as partners in the provision of energy
• Intensively monitor key market actors (utilities, ERCOT) other federal, state and local initiatives that may affect energy in the future

TCAP is a coalition of 158 member cities and political subdivisions that pool their resources to purchase electricity for governmental use. Dr. Moravec has served on the board of TCAP since its inception in early 2011, and also served on the board of one of its predecessor organizations, the Cities Aggregation Power Project, Inc.

His appointment as TCAP executive director becomes effective Oct. 3.

“We’re excited to have Dr. Moravec taking the reins as the first executive director of TCAP,” said Jay Doegey, the coalition’s board president. “With his understanding of the electricity market and municipal government — and his extensive leadership experience — Dr. Moravec will help guide TCAP as it works to save money for Texas cities and their citizens.”

Dr. Moravec has served since 1987 as the finance director for the Town of Addison. He also served on the TCAP board as its organization’s secretary, and as vice chairman of the Cities Aggregation Power Project. Dr. Moravec received his Ph.D in public affairs from the University of Texas-Arlington in 2011.

As TCAP executive director, Dr. Moravec will execute policies developed by the organization’s 15-member Board of Directors, which is comprised of representatives of member cities. Dr. Moravec also will help coordinate the solicita- tion and award of electric supply contracts for TCAP, help expand TCAP’s membership, and respond to the needs of the organization’s member cities.

“I’m deeply honored to become 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 be part of that effort.”

TCAP’s 158 members include Abilene, Addison, Arlington, Belton, Corpus Christi, Frisco, Grand Prairie, Grapevine, Harlingen, Kingsville, Mansfield, McAllen, Midlothian, Nacogdoches, 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.

Through TCAP, those cities purchase in excess of 1.3 billion kilowatt/hours of power each year for street lighting, office buildings, water and wastewater plants and other municipal needs. Because energy purchases make up such a large portion of a city’s operating expenditures, even a single-penny increase in rates can equate to millions of dollars in lost tax dollars. Unaffordable electricity also can impact the welfare of city residents.

Legal Q&A

By Scott Houston
TML General Counsel

Note: Cities have various interests relating to how they and their citizens get electric service, how cities with municipally owned electric utilities provide service, and the prices that everyone pays for electricity. Cities also receive franchise fees from utilities that use their rights-of-way, and they have original jurisdiction over the rates of investor owned utilities in their cities.
How electricity is provided in Texas is complex and based on many moving parts in an always changing puzzle, there’s no doubt about that. The following questions and answers attempt to provide a “primer” on the issues facing cities in this area.

Q What are the different ways cities and their citizens get their electricity?

A Cities and their citizens generally get their electricity in one of three ways: (1) from a municipally owned utility (MOU); (2) from an investor owned utility (IOU); or (3) from a rural electric cooperative (Coop). Each of those providers usually has a monopoly in the areas they serve, based on a certificate from the state Public Utility Commission (PUC). (Note: A few areas of the state are served by river authorities and municipal power agencies. Also, with regard to an IOU, only the transmission and distribution component, discussed below, has a geographical monopoly in the deregulated market.)

After deregulation, MOUs and Coops retain that monopoly status, unless they choose—by a vote of their governing body—to adopt customer choice. The reasons for allowing MOUs and Coops discretion to retain their monopoly status are many, but one of the most important is that MOU and Coop rates are governed by a city council or board, the members of which are elected by the customers. The city council or board of directors is therefore accountable directly to the customers they serve.

IOUs are also governed by a board of directors, but they are accountable to their shareholders, rather than their customers. The rates of investor-owned transmission and distribution utility (discussed below) are regulated by the Texas Public Utility Commission (PUC) in a way that should—in theory—cover costsof operation and allow for a reasonable profit.

Q What is electric deregulation, and why should city officials care?

A In 1999, legislation was enacted to deregulate the portion of the state that is served by IOUs. MOUs and Coops are given the option to participate in the deregulated market by “opting in” to competition. However, to date no MOU has opted in.

Prior to deregulation being fully implemented in 2002, a single IOU performed all the things necessary to provide service to customers within its designated service area. In simple terms, the legislation “broke up” or “unbundled” investor owned utility monopolies. Those utilities were divided up into different components: generation, transmission and distribution, and retail service. Some utilities sold one or two of those parts of their business, while others created subsidiary companies to run them.

Generation companies obviously make the power through power plants, wind farms, and other means. Transmission and distribution companies move the power from the generators to other parts of the state with huge transmission lines, and ultimately distribute it to the customers through smaller distribution lines.

While the generation and retail portions of the market are now deregulated, the rates of transmission and distribution utilities are still regulated by cities and the PUC. That is necessary because the companies that generate power must have a reliable way to get that power to the retail companies, which actually sell the power to customers.

The retail companies are numerous and essentially speculate as to how much generation will cost them. They then offer price plans to consumers accordingly. They are the ones with which customers in a deregulated area interact. Customers can switch retail companies to try to get the best possible rate. Certain areas of the state—including the Panhandle, El Paso, and certain areas in the northeast and southeast portions of the state—are served by IOUs, but have not been deregulated. Those areas are not a part of the main transmission grid in Texas. Thus, deregulation is impractical.

Whether deregulation has been beneficial to cities and their citizens remains the subject of heated debate. One thing is sure: deregulation has changed the way cities in the deregulated market purchase power for city facilities. One way cities and other political subdivisions do that is by a process called aggregation. Aggregation means just what it says: Cities join together, or “aggregate,” to purchase energy at a better price than they could obtain by themselves. (Note: State law also authorizes citizens to aggregate, but the logistics of that process have made it all but useless. Previous legislative efforts to allow cities to automatically bundle-up their citizens and negotiate on the citizens’ behalf have
failed.) The most well-known aggregation group is called the Texas Coalition for Affordable Power, which represents more than 100 cities.

Q Does anyone oversee the complex deregulated electricity market?

A Yes. The PUC is supposed to monitor the generation, transmission, distribution, and sale of electricity and protect against any company attempting to manipulate the deregulated market. Reviews of the PUC’s performance in this role have varied.

In addition, the law provides that an independent entity will oversee important operational aspects of the deregulated market. That entity is known as the Electric Reliability Council of Texas (ERCOT). ERCOT is not a governmental entity; rather, it is a non-profit corporation that is supposed to maintain the flow of power across the market, oversee the operations of the wholesale electricity market, supervise transmission planning, ensure that there is always adequate power available on the grid, and take action to minimize congestion on transmission lines.

As with the PUC, reviews of ERCOT’s performance have varied. Most recently, pointed questions were directed to ERCOT regarding its accountability for rolling blackouts. Increasing prices, claims of market manipulation by certain companies, internal scandals, and administrative difficulties have somewhat marred ERCOT’s reputation.

Q How are electric service areas defined?

A The PUC issues certificates for most entities that provide electric service. Once an entity has received a certificate, it is an arduous process to modify it. Note that the PUC is authorized to, and has, issued “dual” certificates to allow more than one entity to serve an area.

Q Why aren’t MOUs opting into the deregulated market?

A Even though they are not required to do so, MOUs have the discretion to opt in to the deregulated market. Many state leaders continue to applaud the Texas deregulated market as one that has created lower prices. For a number of reasons, that is questionable. It would also appear that MOUs aren’t convinced, and that their citizens prefer the consistently lower prices and better service that they provide. It’s a case of “if it ain’t broke, don’t fix it.” MOUs can wait and see if opting in to deregulation would really benefit their customers. Also, an MOU that opts in is essentially stuck with that decision. Further, opting into competition would require an MOU to undertake the complex and expensive process of breaking up its service into the three components of the deregulated market (that is, generation, transmission and distribution, and retail).

Q What are recent criticisms levied against MOUs?

A Some MOUs have been criticized recently for transferring some of their profits to the city’s general fund. Interestingly, even larger cities that transfer large amounts of revenue have electric rates that are comparable to, or lower than, IOUs serving the deregulated market. In addition, cities may or may not charge their MOUs franchise fees for the use of the city’s rights-of-way. Thus, the transfer is often analogous to a franchise payment that the city would receive from an IOU that uses the city’s rights-of-way. In any case, it is currently up to each city’s council to decide how to handle transfers. Another way to look at transfers is that they are very similar to the return on investment that IOUs give back to their shareholders. But in the case of an MOU, the “shareholders” are the taxpayers of the city. Transferred revenue is used to pay for services (police, fire, EMS, streets, and so on) that are used by the customers of the MOU. The transferred revenue is used to keep property tax rates low, which benefits the taxpayers served by the MOU.

Q What are electric franchise fees?

A Electric franchise fees are fees paid by IOUs or coops (and in some cases, MOUs that provide service in other cities) that use a city’s rights-of-way to provide service. Both state law and the Texas Constitution provide that a city may not allow a private entity to use city property for free.

Electric deregulation changed the way in which municipal franchise fees are charged and collected. Traditionally, cities and IOUs or coops operated under a franchise agreement that governed the amount the utility paid for use of the city’s rights-of-way, typically stated as a percentage of the utility’s gross receipts for service provided within the city limits.

Prior to deregulation, cities and electric utilities were free to enter into franchises that provided for a fee of two percent or greater, and it was on that basis that many cities negotiated for and received franchise fees of three or four percent of gross receipts.

Since deregulation was implemented, a city’s electric franchise fee has been based on the number of kilowatt-hours (kwh) that a utility delivered to customers located within the city’s boundaries in 1998. The total franchise fees for the year 1998 are divided by the total kwhs for that year to arrive at a “per kwh rate.” That rate is multiplied by the current kilowatt hours used by all customers within the city to arrive at the franchise fee amount due to the city. (Note: Some coops still pay the fees according to a percentage of gross receipts, and that is allowed by state law.)

Q What do critics of electric franchise fees say?

A Some argue that franchise fees of any type are a “hidden tax” on utility service. Of course, the municipal position is that the fees are authorized by state law. In fact, the Texas Constitution prohibits a city from giving away anything of value (for example, the use of city property) to a private entity. Thus, the city position is that the fees are nothing more than “rental” payments for the use of city property.

Q How are IOU electric rates regulated?

A In a city served by an MOU or a coop, the rates are set by the governing bodies of either the city or the coop. In a deregulated market, the practice is much more complex.

Cities have a long history of participation in the ratemaking process for electric utilities. Prior to the enactment of the Public Utility Regulatory Act (PURA) in 1975, electric rates were set exclusively at the city level, with appeals going to the courts. Cities were originally granted the authority to regulate electric rates, because most utilities operated within cities. Later, the state began regulating electric rates outside of cities, and ultimately took over appeals from city jurisdiction as well.

Currently, cities have original jurisdiction over the electric rates of transmission and distribution IOUs within their city limits. The PUC has original jurisdiction over electric rates outside city limits and appellate jurisdiction over the actions of cities. (In addition, some cities have ceded their original jurisdiction inside the city limits to the PUC.)

A transmission and distribution utility that is within a city and wishes to increase its rates is now subject to the original jurisdiction of that city. In practice, however, most cases are now appealed, consolidated, and heard and decided by the PUC. The rate-setting process is a complex one. Essentially, a utility submits reams of information to the city relating to investments in infrastructure and operational costs. The goal of the city, and ultimately the PUC on appeal, is to ensure that the proposed rates are fair, just, and reasonable.

Q What is a city’s role in setting IOU electric rates?

A When a rate increase is submitted to a city, the city council in practice usually denies the increase or suspends its implementation. Because the case will eventually wind up at the PUC, those actions give the city time to work with lawyers and consultants to review whether the increase is justified.

As a matter of course, cities that seek to participate in the rate-setting process join coalitions. The pooling of resources with a coalition avoids duplication of effort. And when the case ultimately ends up before the PUC, the cities present a unified front and reduce costs. Under state law, the utility seeking the increase pays for the legal and consulting fees of the cities. Those costs can easily reach into the millions of dollars, and they are added to the rate increase to be paid for by customers.

For a number of years, many city officials have believed that they are the only thing standing between utility companies and their constituents. That is because the PUC, understaffed and underfunded, does not have the resources to ferret out unnecessary increases in the reams of paperwork provided by the utility as justification. It is a fact that municipal intervention has saved money for customers. In one 2010 case, municipal intervention reduced a transmission and distribution company’s rate increase from $253 million to $130 million. If cities are denied original jurisdiction, or the ability to intervene (and to be reimbursed for that intervention), electric rates would undoubtedly go up. ★

Published in Texas Town & City, April 2011
Texas Municipal League

Coalitions Representing More Than 150 Cities Send Letter Calling for Action by Texas Legislature

AUSTIN, Texas–(BUSINESS WIRE)–Excessive electricity prices under electric deregulation have cost Texans an additional $15.5 billion, according to a comprehensive new report on the deregulated market.

Judged in terms of increases in average electricity prices, the deregulated market in Texas has been one of the nation’s poorest performing, according to the report. It also cites evidence that Texans in deregulated areas consistently pay more for electricity than Texans in areas exempted from deregulation.

Citing the findings, the chairman of the two city coalitions that commissioned the report distributed a letter to state lawmakers this week calling for important reforms. The coalitions that commissioned the study, the Steering Committee of Cities Served by Oncor and the Texas Coalition for Affordable Power, represent more than 150 cities and political subdivisions in Texas with more than 3.5 million residents.

“This report shows that it’s time to fix deregulation,” said Jay Doegey, who chairs both coalitions. “We support electric competition — but competition that works for Texas residents and businesses. Years of electricity prices above the national average needlessly have cost Texans billions of dollars. These high prices have taken a toll on personal finances and the state’s economy. It’s money that could have been used for other priorities.”

The report, delivered this month to all members of the Texas Legislature, documents recent declines in electric prices in Texas (currently average residential prices are slightly below the national average), but found no evidence that those declines have compensated for years of inefficiency in the market. Judged in terms of changes in the average price of electricity, the deregulated market in Texas has performed worse than residential electricity markets in most other states — including most states with deregulation, the report shows.

Key findings include:

• In terms of increases in average residential electricity prices between 1999 and 2010, Texas ranks ninth nationally, fourth among 15 states with electric deregulation and third among 22 states with a reliance on natural gas to fuel generation plants.
• Since the Texas electric deregulation law took effect, Texas residential consumers have paid more than $11 billion in excess costs resulting from electricity prices above the national average. Prior to the adoption of the deregulation law, Texans consistently paid below the national average.
• All classes of Texas electricity consumers — that is, residential, commercial and industrial — would have saved $15.5 billion had prices remained at the national average since the beginning of retail electric deregulation. In the ten years leading up to the deregulation law, all groups of Texas consumers collectively paid $17.6 billion less than the national average.
• For every year there is data to make a comparison, residential consumers in areas of Texas with retail electric deregulation (such as Houston and Dallas) have paid average electricity prices higher than residential consumers living in areas of the state outside deregulation (such as San Antonio and Austin). Texans outside deregulation consistently pay below the national average, while Texans inside deregulation consistently pay above it.
• Recent declines in the price of electricity in Texas relate largely to changes in the commodity cost of natural gas, which is used to fuel many generation plants. However, data cited by the report show that the declines in average electricity prices have been less pronounced in deregulated areas, as compared to areas of Texas outside deregulation. This suggests that the deregulated market in Texas is much less nimble in its response to changing conditions, as compared to areas of the state exempt from deregulation.

Based on these findings, the city coalitions recommend the following action:

• The Texas Legislature should reject proposals to create new “streamlined” or “one-way” ratemaking rules. Such regulatory gimmicks will increase electricity prices in Texas and contribute to bloated utility spending. Texas utility lobbyists are currently pressing for such changes.
• Regulators should be given authority to assess higher fines for anti-competitive activities in the wholesale electricity spot market. A loophole that allows relatively small generators to engage in anti-competitive behavior should be closed.
• Electric generation companies that bid their power into the wholesale spot market at excessive prices should be promptly identified after they submit their bids. Such disclosures will discourage anti-competitive bidding practices. Texans ultimately must pay for this electricity and have a right to know where their money is going.
• Retail electric providers should be required to offer standardized fixed-rate products among their selection of other electricity products. This will make it easier for Texas residential consumers in deregulated areas to make apples-to-apples price comparisons when shopping for electricity.

The Story of ERCOT is based on months of research, including a review of journalistic accounts, regulatory documents, academic studies and data from the United States Energy Information Administration. It includes separate findings relating to the Electric Reliability Council of Texas, which is the organization that manages the state’s power grid. Those findings were detailed in an earlier press release.

The Story of ERCOT is available for download at www.tcaptx.com.

Photos/Multimedia Gallery Available: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=6623921&lang=en

Contacts

for the Texas Coalition for Affordable Power
R.A. “Jake” Dyer, 512-322-5898

AUSTIN, Texas–(BUSINESS WIRE)–The Electric Reliability Council of Texas, the organization now under fire for the recent blackouts in Texas, has a history of missteps, mismanagement and broken deadlines, according to a new study released Monday to all members of the Texas Legislature.

Commissioned by two non-profit municipal coalitions, The Story of ERCOT documents an alarming increase in borrowing and spending by the organization and a lack of accountability to state officials and regulators. The report shows that self-interested industry players dominate the ERCOT board while Texas consumers, who indirectly or directly pay the entire cost of the organization and the electric market that it helps oversee, have only a limited voice.

The twin coalitions that commissioned the study, the Steering Committee of Cities Served by Oncor and the Texas Coalition for Affordable Power, represent more than 150 cities and political subdivisions in Texas. Jay Doegey, who chairs both coalitions, said the report shows that missteps at ERCOT have needlessly cost Texans hundreds of millions of dollars.

“Texans deserve better than this,” said Doegey. “Residential consumers and businesses — those who actually foot the entire bill for this organization — should have more representation on the ERCOT board. The out-of-control spending, mismanagement and lack of accountability must end.”

ERCOT’s performance during the recent blackouts is expected to become the subject of a key legislative hearing this week. ERCOT also came under fire during rolling blackouts in 2006.

Report also identifies problems with rules governing the wholesale electricity market

Separately, the report also includes important findings relating to the deregulated electricity market in Texas. The market is largely overseen by the state’s Public Utility Commission.

For instance, the report found that a legal loophole allows some electric generation companies to engage in anti-competitive activities. Another loophole prevents the PUC from ordering restitution to consumers or entities harmed by improper market manipulation.

The report also documents instances in which electric generators have sold power at levels well above their marginal cost, a sign that the Texas market is insufficiently competitive. Policymakers have rejected rules that would limit excessive prices in the wholesale market.

“Texans have paid billions of dollars in excess costs because of inefficiencies in the deregulated market,” said Doegey. “We support competition in the electricity market — but competition that works. It’s time to close the loophole on anti-competitive activities and time to fix the broken enforcement process. Big generators must not profit through deceit.”

Based on the findings, the city coalitions recommend the following legislative reforms:

*The Public Utility Commission should be granted greater authority over ERCOT’s borrowing and spending.

*Consumers ultimately pay all costs in the electricity market, but only control a minority of seats on the ERCOT board of directors. This should change.

* The PUC should be granted authority to order restitution to parties harmed by anti-competitive activities. A loophole that allows relatively small generators to engage in anti-competitive behavior should be closed.

The Story of ERCOT is based on months of research, including a review of journalistic accounts, regulatory documents, academic studies and years of data from the United States Energy Information Administration. It is available for download at www.tcaptx.com.

ERCOT CEO Trip Doggett is under fire. During a meeting Thursday of the Texas Public Utility Commission, he was made aware that his job may be on the line. As part of a routine review of ERCOT rules, Commissioner Donna Nelson proposed “adding language that says the commission at its own discretion and without ERCOT board approval may terminate the employment of the chief executive officer.”

Nelson said there was clear evidence that ERCOT should have been aware there were problems before the blackouts last week. You can see the exchange in the TV report, above.

The cold weather has been blamed for the blackouts in Texas this week. But questions remain. Photo Courtesy: David R. Tribble

Wholesale electric prices spiked 3,000 percent

The cold weather has been blamed for the blackouts that left thousands of Texans without heat and power this week. ERCOT, the organization that operates the Texas power grid, said it had lost about 7,000 megawatts of generation — a massive amount, the equivalent of more than two big nuclear plants. Many questions remain.

• Texas homeowners were prepared for the cold snap and knew enough to wrap their pipes. But what about the state’s big electric generators? The temperature dropped overnight Tuesday — but not to unprecedented levels. And the quick drop should not have come as a surprise to anyone. And yet it’s been reported that 50 of the state’s 550 power plants had been knocked offline by severe weather. What could have been done to prevent such a massive loss?

• Wholesale energy prices spiked dramatically shortly before the rolling blackouts, and then remained at nearly unprecedented levels for several hours afterward. Were these prices warranted? A review of ERCOT data shows that for much of the evening spot energy was selling at below $75 to $125 per megawatt/hour. That’s a bit high, but nothing too far out of the ordinary. But then at 3:45 a.m. — nearly two hours before the rolling blackouts began — prices spiked to more than $1,100, an increase of approximately 1,000 percent. At 5:15 a.m., 15 minutes before the rolling blackouts, spot prices shot past the $3,000 mark. And they stayed there for much of the morning.

Obviously, someone within the electric industry made hundreds of thousands or even millions of dollars during the blackouts. Were those high prices justified, or was there a breakdown in the competitive market? It’s also clear that Texas lost a massive amount of generation, but it’s not clear why.

The Public Utility Commission and the state’s Independent Market Monitor (an entity that’s charged with playing a watchdog role in the wholesale electricity market) should take a long hard look at the blackout and the circumstances surrounding it. Texans deserve answers.

– R.A. Dyer

The state’s largest electric transmission company is requesting an increase that would total $350 million in additional revenue each year. Broken down, that’s about $60 annually for each of Oncor’s residential customers.

The proposed hike comes on the heels of Oncor’s 2009 hike that increased bills by $3 a month. That earlier request flooded company coffers with an extra $115 million annually.

So, when do the rate hikes stop? Oncor, a company with very little financial risk, would see its profit margin on capital investments increase from 10.25 percent to 11.25 percent under the new proposal. And when combined with the effects of the previous hike, the proposed new hike could mean Oncor’s customers could soon be shelling out nearly a half billion dollars more each year to the company.

Oncor serves approximately 7 million people in a service territory that includes large areas of North, West, East and Central Texas. The hike would become part of all bills for electric service in that territory, regardless of the customers’ individual retail electric provider.

The Public Utility Commission is expected to rule on Oncor’s request later this year.

Make your voice heard. Sign the petition at RechargeTexas.com or follow us on Facebook.com/RechargeTexas to find out what you can do.

Read the Dallas Morning News article.

Read the Fort Worth Star Telegram article.

TCAP supports electric market reforms that will save money for Texans.  Affordable power in a fully competitive market means economic development for Texas communities and a better life for its citizens.

To read more about TCAP’s purpose and goals, please visit our Legislation Position.

If you are interested in joining TCAP, please visit our Membership page.

The Public Utility Commission, in a recent draft of its  Scope of Competition report, makes the following bold statement: “Texas continues to be recognized as the most successful competitive retail market in North America.” To justify this assertion, the PUC cites the very important-sounding “Annual Baseline Assessment of Choice in Canada and the United States,”  also known as the “ABACCUS” report.

But here’s the problem: ABACCUS is not an unbiased academic report, but rather created for and by the electric industry. This year it was distributed by an organization called the Distributed Energy Financial Group, which provides management consulting services for the energy industry. It’s also associated with an organization known as the Energy Retailer Research Consortium, which is comprised of companies with a stake in competitive retail energy markets.  These reports are far from impartial.

Particularly troubling about this report is its insufficient focus on pricing. The cost of electricity is probably the single most important aspect of the electricity market to anyone not actually employed as a manager in the electric industry.  This is common sense.  But when ranking electricity markets nationwide, the ABACCUS report did not consider the cost of electricity for the home consumer. This is an especially shocking omission, given that the industry professionals surveyed for the ABACCUS report even listed low prices as the top goal of deregulation.

Had the ABACCUS report taken electricity prices into account, it might have reached different conclusions about Texas. For instance, while prices in the Lone Star State have dipped recently (because of fluctuations in the related natural gas market), year-to-date residential electricity prices still remain higher than the national average. This is a reversal of many years of below average prices before the deregulation law.

Here are other facts ignored in the ABACCUS analysis:

• Residents in Texas continue paying substantially more for electricity than residents in Louisiana, Oklahoma and Arkansas.
• Electric prices in Texas have increased by a greater extent than they have in most other deregulated states.
• Electric prices in Texas have increased by a greater extent than they have in most other states with a similar reliance on natural gas to fuel generating plants.
• Federal data show a consistent trend of electricity prices above the national average in areas of Texas subject to deregulation, and below-average prices in areas of Texas outside deregulation.

It’s clear from even a cursory examination of the available data that Texans should be enjoying greater benefits from the deregulated market. It’s clear that despite recent drops, the cost of electricity simply remains too high. The good news is that reform is possible. But we can’t make a fix without first acknowledging there’s a problem.

– R.A. Dyer