Operating Outside Free Market, Houston’s CenterPoint Maximizes Profits by Lobbying Against Oversight

monopoly-man Houston’s CenterPoint Energy is at again.

The big monopoly with a reputation for bad ideas has successfully lobbied for a rule change at the Texas Railroad Commission that will allow gas utilities to more easily increase rates.

The anti-consumer policy change was adopted over the strenuous objection of city officials and state lawmakers. The change was approved last week, although it won’t take effect until September.

“The commission members not only ignored the concerns of city officials, they also pretty much thumbed their noses at the Legislature and did the bidding of one natural gas utility company,” said Bennett Sandlin, executive director of the Texas Municipal League, a coalition of cities.

CenterPoint serves millions of captive gas and electric customers around the Texas Gulf Coast, the Houston area, and in parts of east, southeast and south Texas. Because the company operates state-sanctioned monopolies, CenterPoint maximizes profits not by competing in the free market but rather by hiking rates and — increasingly — by working against regulatory oversight.

CenterPoint in recent years has pursued an extremely aggressive lobbying strategy — pushing for rule changes at state agencies and statutory changes at the Texas Legislature.  What these changes have in common is that each allows CenterPoint and other utilities to more easily increase their prices.

Here’s a few of the highlights:

  • In 2013 CenterPoint successfully lobbied for Senate Bill 1364 that prevents ratepayers from sharing in the benefit of certain federal tax advantages that ratepayers already are providing to electric companies. SB 1364 bars the Public Utility Commission from granting rate discounts relating to those tax breaks, and will end up costing ratepayers tens of millions of dollars each year.
  • In 2011 CenterPoint pushed through Senate Bill 1693 that expedites regulatory review of investment in local distribution lines while excluding review of items that would offset the need for a rate increase.  CenterPoint also successfully lobbied in 2011 for Senate Bill 403, a state law that allows gas utilities to collect additional money from ratepayers for certain pension-related expenses.
  • In 2009 CenterPoint lobbyists pushed through Senate Bill 769 that allows electric utilities to pursue rapid rate increases with little scrutiny just so long as the proposed rate increase relates to extreme weather events. The day after the legislation became law, CenterPoint filed paperwork for a $678 million rate hike.

With each of the legislative changes, the regulatory field tilts further in favor of CenterPoint and other big monopoly utilities, and against the state’s captive electric or gas customers. The rule changes also have reduced local control over utility rates charged locally, and may have contributed to excessive profits for CenterPoint.

According to a campaign finance watchdog group, CenterPoint spent between $885,000 and $1.8 million on lobby contracts during the 2013 session of the Texas Legislature. CenterPoint also owns a fishing lodge known as “The Pond” that reportedly has been used by the company to entertain public officials.

— 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.