amenable. But in the last days of the session, Perry OK’d an item from the industry’s wish list”securitization” of bonds to pay for hurricane-related costs to the utilitiesbut not Turner’s bills. The next day, May 12, Turner took to the House floor to scorn the body for doing “more for the electricity people than we’ll do for mom and dad working two and three jobs just to keep their electricity on.” To Turner’s chagrin, the PUC had joined the industry in vigorously attacking Turner’s price-to-beat-adjustment bill as government tampering with the market. PUC Chairman Paul Hudsonwho only months earlier had floated a similar proposal at the PUC that was rejected by the other two commissionerstold Turner, “There are some customers in the marketplace today that I believe are paying more than they should, and I invite those customers to switch [providers].” Hudson and deregulation backers have been flogging a PUC study commissioned by Turner that concludes that a consumer in the Houston and Dallas-Fort Worth areas could have saved $1,450 and $800, respectively, over four years by switching to the lowest-cost provider each year versus what the study’s authors predict the consumer would have paid in a regulated environment. “It’s simply unacceptable that so many customers are seemingly unwilling to choose a new electricity provider in the face of new cost savings,” Hudson told Turner. The PUC study “looks at what may have happened,” says Carol Biedrzycki, executive director of Texas Ratepayers’ Organization to Save Electricity, or Texas ROSE. “It doesn’t look at what did happen. And it’s blaming the consumer for everything wrong with this market.” Turner, who has dismissed the PUC study as a whitewash, worries that lawmakers are naive about actual consumer behavior. “The reality is, every year people are not going to switch,” Turner says. Low-income individuals tend to “stay with the incumbent for many reasonsthe trust factor, the lack-of-trust factor with other providers, they’ve been bombarded so much, they’re working two, three jobs, so they stay.” For her part, Doris Marshall hasn’t received a single solicitation from a TXU competitor in the mail but has looked into other companies on her own. She is not impressed. “I’m skeptical about people I’ve never heard of and know nothing about,” she says. “I know TXU and Reliant.” That attitude was also reflected at a May 30 rally at a Reliant shareholder meeting organized by the community action group ACORN. Protesters there, while criticizing Reliant, Houston’s incumbent utility, for “overcharging,” said they didn’t trust other companies, especially in a power emergency. “With the hurricane incident, you don’t want to change companies,” said Patricia Thompson, a Houston postal worker. She said that with a sister who depends on an oxygen respirator, “I can’t take the chance” of switching to an unknown provider. “When consumers complain, they are often told they can save money if they shop around,” says AARP’s Sanchez. “But there are a number of barriers to that”high deposits based on people’s credit history, confusing offers, misleading terms of service, companies going bankrupt or abandoning the retail market, and lack of trust between new electric companies and consumers. “We think electricity is headed down the same path we’ve seen mortgages and other financial institutions headed,” says Virginia Goldman, the head ACORN organizer in Houston. “The people with the worst credit and the least amount of money are going to end up paying the most and having to go with the electric providers that have the most predatory rates.” There is evidence that this tiered system is already in play. One company operating in the Houston area, Affordable Power Plan LP, sells prepaid electricity plans from convenience stores. At a rate of 17 cents per kwh, Affordable is the least affordable in the entire Reliant service area, but Kamram Visani, the company’s president, says it charges a “premium” for not requiring a deposit or credit check. “We have a lot of customers who have been denied services by other companies because of bad credit or no credit,” says Visani. \(The PUC staff is recommending $446,000 in fines against Affordable for allegedly illegally disconnecting customers; Visani says the In the end, many consumers say they don’t see any substantial savings from the dozen or so competing companies in their area. At least in the TXU service area, this suspicion seems to be borne out by fact. This spring, there were 13 companies offering 30 plans to Marshall in the TXU service area, according to the PUC’s online clearinghouse, powertochoose.com . The cheapest offer-11 percent off the price-to-beat rate of 15 cents per kwhwas StarLight Electric’s month-to-month “Star Treatment Plan.” However, the fine print contains some surprises. The listed price of $134 per month can be adjusted monthly to “reflect changes in the cost of fuel used to generate electricity,” according to the company’s “electricity facts label.” And for each month a consumer uses less than 1,000 kwhsay, 999 kwha “meter fee” of $10 is imposed, at which point it is more expensive than the price-to-beat. Like most companies, StarLight researches an applicant’s credit person’s credit is found “unsatisfactory.” Other deals rely on an almost comically complex formula for setting rates. TXU offers a variable-rate service plan called “Energy Market Tracker+” under which monthly rates fluctuate based on the price of natural gas futures contracts on the New York Mercantile Exchange. Consumers who have deep knowledge of energy trading may wish to take a chance. But getting out of the two-year contract costs $200. “The average consumer is not equipped to make these complex decisions,” says Sanchez. “If you get the wrong plan, you’re locked into it and can’t get out of it.” Hadley, the PUC spokesperson, said the agency closely monitors the powertochoose Web site for violations of the rules, but acknowledged that some companies’ electric plans needed to be reviewed. He warned that if “something seems continued on page 16 JUNE 30, 2006 THE TEXAS OBSERVER 9
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