CAPP Chairman Jay Doegey has issued the following statement about an industry-sponsored report issued this week by Waco economist Ray Perryman.
“We agree with Mr. Perryman’s findings that Texans have paid more for electricity since the Legislature deregulated the state’s retail electricity market 10 years ago. But it’s time to stop falling back on the same tired industry excuses for those needlessly high electricity prices and start coming up with real solutions.
In his industry-sponsored study, Mr. Perryman asserts that it’s not deregulation that is to blame for high prices but the state’s heavy reliance on natural gas to generate power. He notes that the cost of producing energy from natural gas-fired plants has gone up over the last several years. But contrary to the assertions of Mr. Perryman and his industry backers, electric deregulation has not dampened that effect for consumers — it has exacerbated the problem. Customers in Texas that are outside deregulation (electric co-operatives, municipally owned utilities, and investor owned utilities in the Texas Panhandle) pay less for electricity than customers in Texas served by the deregulated market, even though all electricity sold in Texas relies on natural gas-fired generation plants. The disparity between electricity prices paid in deregulated areas extends beyond Texas. Customers in other states heavily dependent upon natural gas-fired generation have lower average rates than the prices paid by Texans served by deregulated providers.
Mr. Perryman also repeats the industry claim that electricity costs are below the levels that would have occurred had Texas never deregulated its retail electric markets. This groundless assertion ignores the price trends of the last two decades. Texans paid well below the national average for electricity for many years before Senate Bill 7 was passed in 1999. After the state restructured the market, Texans paid prices above the national average.
Finally, Mr. Perryman claims that the deregulated electric market is responsible for billions of dollars invested in generation capacity since 1999, translating into a substantial stimulus for the state”s economy. The result Mr. Perryman and industry backers attribute to the deregulation law is actually a result of Texas” substantial population growth over the past decade. More people equals more demand for electricity and more generation plants and transmission lines to supply that power. Neither has Mr. Perryman factored into his calculations the negative effect on commerce of higher than necessary electric prices.
Texans already know they’re paying too much for electricity. The electric industry lobby should stop trying to convince Texans that they’re getting a good deal under the current system, and start looking for real solutions. Failure to do that has wide ranging implications. High electric prices harm consumers and drive economic development away from Texas.”
Is a policy analyst consultant for TCAP, a coalition of political subdivisions in Texas that purchase electricity in the deregulated market for their own governmental use. Because energy costs are typically a significant budget item to our members, TCAP is consistently looking for ways to save our members money, through cost-saving contracts, energy efficiency or demand response programs.