Rep. Sylvester Turner Pho to: Texas House Pho to ing in regulated areas, what people are paying in co-ops, city-owned utilities.” In April Turner, a 18-year veteran of the Legislature who mixes a lawyer’s intellectual precision with preacherly appeals to the common good, organized a town hall meeting in Houston to discuss electricity rates. Houston Mayor Bill White attended, as well as two U.S. congressmen, representatives from the electric companies, and consumer advocates. The turnout surprised Turner: 700 peoplefrustrated and angrycame from all over the city to complain about high rates and confusing choices. “No matter what the PUC and the industry is trying to convince people, that all is well and this is the best thing going and you’re really getting a good deal,” Turner said, “I’m sorry, I think the people beg to differ?’ During the recent special session called by Gov. Rick Perry to draft a school finance plan, Turner proposed legislation to give rate relief to electricity consumers. One bill would have restored the $400 million “Lite-Up Texas” program, created as part of SB 7, to its original purposeproviding a 10 to 20 percent subsidy to low-income electric customers. \(Although the state continues to collect fees from customers’ bills for the fund, the Legislature transferred the money into general monopoly utilities to adjust their price-to-beat rates downward to reflect lower natural gas prices, which he said would save the average consumer an estimated $20 to $25 a month. \(With 1.7 million TXU customers on price-to-beat, the total savings for these households each month would be about $40 goes away in January, Turner was pitching the bill as “summer relief,” as well as a way to get prices on track for full-blown competition next year. Turner says customers are paying “artificially inflated prices” because the companies adjusted their rates upward, with PUC approval, after hurricanes Katrina and Rita when natural gas prices soared. Since then, natural gas has come down about 25 percent, but the price-to-beat electricity rates have remained the same. “It is certainly accurate to say that the specific priceto-beat, how it stands now, is inflated over the market price as it stands now,” said Terry Hadley, PUC spokesman. But, he added, incumbent companies phased in their price-to-beat rates so as to minimize impact and are offering discounts to customers who wish to switch off the price-to-beat. But under the market design, inflated power prices should afford the other companies the opportunity to beat up on the incumbents. Oddly, the competitors’ rates have hardly budged. Tim Morstad, an analyst with the Office of Public Utility Counsel, the government’s consumer watchdog for utility matters, has calculated that the supposedly competitive rates have dropped less than 3 percent statewide since the beginning of the year. The reason, Turner says, is that “it’s to [the competitors’] advantage for the market to be artificially higher than it should.” This way, the companies can still offer a small discount under the price-to-beat while keeping an ample profit margin. In fact, while competitive rates have not climbed as steeply as the price-to-beat, an Observer analysis of PUC data shows that the average competitive offer in all five major service areas has jumped considerably. The increases range 2006. Competitive companies within the TXU service area came in at a 77 percent increase, and the Reliant area power companies, 80 percent. CPL area competitive prices jumped 79 percent. If this is a competitive market, consumers can be excused for being the last to know; it appears that competitors followed closely on the heels of the price-to-beat as the price of turning on a light, switching on the A/C, or watching television became ever-more expensive. Still, the PUC plays up the 30 percent of people who have moved off the PTB and captured some savings. “Well over a million people have switched to a competitive provider and apparently are satisfied with that,” said Hadley. But, he added, “Some people would say that’s not enough.” Turner’s bills died in committee, a surprise to him since he had met with the governor the week before to sound him out on adding the bills to the agenda. Perry, Turner says, seemed 8 THE TEXAS OBSERVER JUNE 30, 2006
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