Reducing confusion in the Texas electricity market, encouraging policies to bring Texas rates back down to their historic levels below the national average, and cracking down on anti-competitive abuses — these reforms and more were among those offered this week to state lawmakers.
The Sunset Advisory Commission, a panel of state senators and representatives, received the proposals as part of its ongoing top-to-bottom review of two organizations that oversee electric deregulation. During a public hearing this week, a coalition of municipal consumers known as the Cities Aggregation Power Project proposed some of the most important changes.
CAPP chairman Jay Doegey told lawmakers that cities have a direct interest in an efficient and well-functioning electricity market. That’s because an efficient market can lead to reduced electric rates for residential consumers, and reduced operating costs for businesses and governments.
But Doegey noted that under deregulation, electric rates have soared to levels consistently above the national average. Prior to the adoption of the deregulation law, rates in Texas were consistently below the national average.
Also, despite some recent leveling-off of prices in Texas and elsewhere, it’s still true that residential electricity prices have increased by a greater percentage in Texas during the overall period of deregulation than they have in almost every other state.
“But we are not out here to reregulate,” cautioned Doegey. “What we want is for competition to work for consumers. Our coalition members have been active participants in this market. We’ve seen what has worked, and what hasn’t. All of our cities have an interest in the creation of the best possible electricity market for all Texas cities, and for our state’s citizens and its businesses.”
CAPP was joined at the public hearing by two other municipal coalitions, the South Texas Aggregation Project and the Steering Committee of Cities Served by Oncor. Together, the groups delivered to lawmakers a stack of more than 100 city resolutions in support of reform.
Despite the long history of price increases, the Texas electric deregulation law has not been meaningfully reformed since its adoption more than a decade ago. Action by the Texas Sunset Advisory Commission could change that. The panel is expected to issue recommendations later this year in advance of the next legislative session, which convenes in January.
- Require more accountability at the organization that manages the Texas power grid
Operating expenses at the Electric Reliability Council of Texas (ERCOT) have increased more than 600 percent since 2000. Debt has increased by more than 800 percent. Consumers should be granted a greater voice at the organization and all ERCOT budgets and debt expenditures should receive pre-approval from state regulators.
- Apples-to-Apples Price Comparisons
Under this proposal, retail electric providers would add standardized deals to their overall menu of electricity packages they offer consumers. The fine print of these standard deals would remain uniform for all electric companies, although companies could price the deals in any way they see fit. Electric companies could also continue selling their full menu of other electricity packages, each with their varying terms and conditions. Through these new standard proposals, consumers would gain the ability to make clear apples-to-apples price comparisons when shopping for electricity.
- Guard against anti-competitive practices
Regulators should be granted greater authority to guard against anti-competitive behavior in the wholesale electricity market. Regulators should have the power to grant refunds for those entities that end up paying higher prices because of anti-competitive abuses. A loophole allowing some generation companies to abuse the market should be closed.
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.