What if our taxes went up every time a single state agency reported increased expenditures? Texas Department of Transportation needs more money? Hike taxes! The state expands a few prisons? Hike taxes! Of course Texans wouldn’t stand for such a knee-jerk budgetary response. We rightfully expect our policymakers to scrub the entire state budget before reaching deeper into our pockets.
And yet “it’s just this sort of fiscally irresponsible thinking that utility officials are peddling as good policy when it comes to setting electric rates,” observes Texas Coalition for Affordable Power President Jay Doegey. Writing in a recent edition of the Houston Chronicle, Doegey notes that so-called “streamlined” or “one-way” ratemaking proposals by the state’s monopoly utilities would allow them to obtain rate hikes without the bother of proving the money is actually needed.
That’s because one-way ratemaking schemes typically bar regulators from considering a utility’s overall savings and revenues. Instead, regulators need only consider certain expenditures in isolation before hiking rates.
The state’s electric monopolies — companies that have a direct financial interest in high electric rates — have filed documents at the Texas Public Utility Commission supporting streamlined ratemaking proposal. Groups representing residential, business and municipal consumers oppose the proposals.
“Electric consumers already face a bewildering array of extra charges,” writes TCAP President Doegey in the March 25 editorial. “Costs associated with advanced meters, new transmission lines for wind developers and storm recovery expenditures will easily exceed $5 billion over time. Electric and gas regulators also have adopted one-way rate-making in other contexts, which likewise has increased home bills while simultaneously padding the bottom line for utilities. That’s why energy companies keep pushing this bad idea and why consumer groups, rightfully, are alarmed.”
You can read the full text of Jay Doegey’s editorial here.
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.