Commission Report Recommends Sweeping Changes in Texas Electricity Groups

Posted on Posted in PUC/ERCOT, Texas Electricity News

This is a fantastic article from the Ft. Worth Star Telegram that I think everyone should check out. It has lots of potential good news for consumers in the Texas electric market. The article discusses the sweeping changes that were recommended by the Sunset Advisory Committee, a group created by the Texas legislature in 1977 to police government and public agencies to eliminate waste and inefficiency. And yes, I realize the irony of the statement in saying that one government agency is going to effectively eliminate overlap and bad policies in another government agency. That being said, the changes suggested in this report are fantastic news for the everyday consumer, although we might not ever be able to tie any benefits directly to these changes (assuming these changes are adopted).

So what are these changes suggested by this commission? First off, the report suggests that the PUC need to be given more teeth to effect changes and levy fines against criminal behavior of people working to fleece the electricity market for profit. This suggested change comes from a 2008 case where Energy Future Holdings was accused of withholding electricity from the market to drive up prices. Energy settled without admitting any wrongdoing, and paid a 15 million fine. The case suggests that the fine was 3 million less than the profits the company made, and more than 40 million less than the 57 million consumer might have overpaid in elevated electric rates. So basically, they got caught with their hand in the cookie jar, and the only punishment that had was to give back some of the cookies they stole. Hardly an impediment on behavior to keep them from doing it again in the future. They didn’t even have to admit to any wrongdoing. In the future, if these changes take place, the idea is that the PUC would be able to actually fine these companies enough money to actually hurt them and alter bad behavior. For companies that are still claiming they are having a hard time making a profit, this could be a huge game changer for the benefit of Texas consumers. If this policy IS adopted, the only question would be whether or not they actually use it, akin to the Death Penalty in college football. Which brings us to the next, and even bigger point.

For the longest time in the worlds of business and government, there have been conflicts of interest in people making the laws, those enforcing them, and those making money in the marketplace. A perfect example is the American political system, full of lobbyists, campaign contributions, and politicians inclined to work in the best interests of those that contribute to their political careers. The Texas electricity market is no exception. The Sunset report urges that ERCOT (Electricity Reliability Council of Texas, responsible for maintaining the grid and transporting electricity over power lines to customers) be given more independence, and most importantly, a new board of operators. Currently most of the 16 members of ERCOT are all pulled from the energy industry and all have financial stakes in the decisions of the council. So it’s the inmates running the asylum. The report suggests all members with industry ties be removed, and the PUC be given more oversight into the actions of ERCOT…particularly since their budget has more than quadrupled in the last ten years.

For the record, the PUC has endorsed the findings of the report. Next up are public hearings, which will take place in May, where the findings will officially be presented to the PUC and ERCOT, and for the Texas Legislature to vote on during next year’s session. So between now and then, consumers just cross their fingers.

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