El Paso Regulated Electricity Isn’t Fantastic

Posted on Posted in Texas Electricity News, Trends

I always seem to get a lot of people who question the Texas deregulated electricity market and categorically dismiss it as inferior to regulated utilities. There is no shortage of people who say the entire system is graft, or some form of organized price gouging to take advantage of consumers. If you haven’t noticed, I’ve written about this kind of thing before:

  • A Dissection of Deregulated Electricity to Regulated Austin Energy
  • Deregulated Electricity is Working
  • A Comparison of Regulated vs. Deregulated Electricity Rates
  • And that doesn’t include mentions by the JD Power & Associates in support of deregulation here, taking the time to correct people who don’t think market activity is a sign of success, and my efforts to respond to people who erroneously blame deregulated electricity for every energy problem under the sun such as Loren Steffy of the Houston Chronicle.

    I think it’s safe to say that people who lazily paint deregulated electricity in a negative light without any support irritate me. Which is why this article by the ABC affiliate in El Paso was a refreshing change of pace for me.

    The whole article is interesting, and as always I encourage everyone to read the entire thing. However, I’ll highlight some points as well. For starters, lets set the stage that El Paso is currently a regulated area of Texas, so customers have only one choice of electricity providers. San Antonio and Austin are always (incorrectly) pointed to as proof that regulation means cheaper electricity prices. How about El Paso?

    The City Council asked El Paso Electric officials on Tuesday to show why electric rates — which are some the highest in the state — should not be lowered, and the city approved establishing a temporary rate at its Oct. 25 meeting.

    So, some of the highest in the state of Texas? So high the City Council is demanding an explanation as to why they’re so high? Check.

    City Rep. Courtney Niland, who said she has been studying the issue, said the utility has not been able to justify the high electric rates. She said the city’s utility consultant, Norman Gordon, had been trying to negotiate with the utility for about three weeks and had a meeting with the company on September 13, in which the utility was asked to ‘show cause’ of their rates. Niland said the city had made every effort to get an explanation from the company, but electric officials had been unwilling

    Ok. In fairness, the CEO of of El Paso Electric says that the city never sent him any formal request and that his efforts to explain his reasoning to Niland were ignored so he stopped trying. Ok, fair enough.

    Actually, to be perfectly honest, the whole article degenerates into a relatively large spat between City Council Representative Courtney Niland and the CEO of El Paso Electric, David Stevens. And to be honest, Neiland seems to be a bit out of control and some of the points Stevens makes might be perfectly valid. Now, that being said, I do find this quote to be very telling:

    Niland contends that the electric company has averted the issue. “What are you not doing in your business that can’t make you competitive, because you and I both know that if you had competition and you had to get competitive, you’d do it,” she told Stevens.
    Stevens said the utility’s rates are high because there’s less consumption in the area, while the cost of producing electricity remains high.

    I’m not sure exactly what the current electric rates are in kWh for El Paso Electric. That information isn’t available online (regulated utilities don’t have to post rates, they don’t have to be accountable to customers). If representative Niland is correct and the El Paso Electric rates are much higher than competitive areas of Texas, that is a big problem. Because, in my opinion. Steven’s reply in the quote above about less consumption doesn’t hold water. And it’s not that less consumption doesn’t result in higher cost, that can be debated. My issue with that statement is that there’s a HUGE chunk of the Texas New Mexico Power Footprint that operates in West Texas, not far from El Paso. This is an area of low population density, and much lower consumption (as are most of the TNMP service pockets). And yet I see electricity rates for different electricity plans fairly close to the rates in Houston on a regular basis. So if that area of West Texas can remain competitive, why can’t El Paso electric?

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