Texas Electricity, TCAP, and a Biased “History” – Part Four

Posted on Posted in Deregulated Electricity, PUC/ERCOT, TER News, Texas Deregulated Electricity, Texas Electricity, Texas Electricity News

Yes, I’m still writing blog posts about TCAP’s recent release of their “history” of deregulated electricity in Texas which they have been still pushing out heavily through PR channels the past couple weeks. I know I initially said I didn’t want to do a 10 part series on this topic, but I never said it wouldn’t take me four or five sections just for me to get through the broad strokes. Which brings us to Part Four. As things stand, I’ve gone through the “Facts” the document claims to examine as well as their “Major Findings” section. In this post I’m going to evaluate their “Recommendations” section. And after that I may or may not write a couple posts looking at some of their more hilarious pieces of “data,” as well as a closer look at TCAP the organization.

Anyway, now that we’ve gone through the laundry list of complaints TCAP seems to have with the deregulated electricity system, lets take a look at how TCAP thinks the system can be improved.

ENHANCE PROTECTIONS AGAINST ANTI-COMPETITIVE ACTIVITIES IN THE WHOLESALE MARKET
Anti-competitive behavior should be prohibited in the wholesale energy market, and legal loopholes that exempt some generators from prosecution should be closed. The submission of “hockey stick bids” and anti-competitive practices prohibited in other states by the Federal Energy Regulatory Commission should be outlawed in Texas. Penalties for anti-competitive activities should be increased. When market power abuses occur, market participants harmed by such anti-competitive activities should be given the right to participate in investigations and enforcement actions undertaken by regulators.

No complaint here. Find the loopholes and eliminate them and fine the people who break the laws.

AVOID CHANGES IN THE MARKET STRUCTURE THAT WILL INCREASE WHOLESALE COSTS
Policymakers should look for ways to stimulate growth in generation resources other than through price supports and subsidies that are inconsistent with the principles of competition and a free market. Policymakers should reject all proposals for “capacity markets,” in which generators get paid even when they do not operate. This will only add to consumer bills.

This is pretty vague. But yes, any other way to stimulate new generation assets that doesn’t include subsidies or price increases is prefereable. But I haven’t heard of any real examples of these possible solutions, and this report doesn’t offer any either. In their document, TCAP has complained about dwindling power reserves, they have complained about deregulated pricing (and incorrectly painted it as some of the highest in the nation when it is in fact some of the cheapest), and they’ve criticized any solution that requires taxpayer subsidies or stimulation to create more generation. Well, that’s pretty much everything. If they dislike all of the options, then what are their proposed solutions?

It is worth noting that Australia, a country with a completely deregulated electricity market, has price caps exceeding $10,0000 per unit. The caps in Texas are currently set at $3,000.

REDUCE CONFUSION IN THE RETAIL ELECTRICITY MARKET
Texas electricity consumers should have access to uniform, standard-offer products. These will help reduce confusion in the retail electricity market and allow for apples-to-apples comparisons in pricing deals. All retail electric providers should be required to promote the powertochoose through a printed notice on home electricity bills.

Again, you won’t see me complaining about this either. I consider myself a consumer advocate and my primary goal as such is to educate people how to navigate the Texas deregulated electricity market. Education is great. But TCAP loves to tout standard offer products, which I’m not against, but what is the standard part? Again, they offer no details or specifics to how this will work. And if you think that is because of space constraints, think again, because their website offers no details or explanations either:

http://rechargetexas.com/apples-to-apples/

The video on that pages says nothing. The text on the page offers no details. It is worthless and just another tool to get people to sign their petition, which in turn gives them cache when lobbying congress. They might have just made a page that says “We Want Everything To Be Awesome!” Gee, really?

When speaking of making standard or uniform offers they obviously don’t mean rates. So what do they mean, the additional charges? That would require the state to interfere with how individual companies conduct business in regards to minimum usage charges and other things. Of course, TCAP doesn’t actually explain or give an example of what this standard offer product would look like. At the end of their day, the big outcry here is that right now customers have read the fine print to understand their charges. Boo. Hoo. I’m all for reform and making things easier, but get back to me when you have a real suggestion for reform instead of just “This is hard because it requires people to read their contracts.”

Also, pay attention to this last sentence in their recommendations:

All retail electric providers should be required to promote the powertochoose through a printed notice on home electricity bills

Laughably, REPs have been required to promote Power To Choose on home electricity bills for years now. Specifically since April 1, 2010.

 

Way to keep up with the times, TCAP.

INCREASE OVERSIGHT OF ERCOT
The PUC should increase its oversight of ERCOT’s finances, both by approving all annual budgets for the organization and by pre-approving all uses of debt by ERCOT.

Finally, a second point I can one hundred percent agree with in regards to this report without any pause. Too bad it only took wading through about 50,000 words.

RE-REGULATION IS NOT THE ANSWER
Policymakers should strive to make the state’s deregulated electricity system as efficient and fair to Texas consumers as possible. Re-regulation is not the answer. Instead, the Public Utility Commission should pursue a balanced approach with regards to the state’s electricity market. Consumer protection should have equal footing with the promotion of competition.

First, I just want to enjoy the irony. Re-regulation isn’t the answer, but apparently almost everything that could be wrong with deregulation is wrong, and TCAP offers no real suggestions for improvement. And to be clear, they have to state they are against re-regulation this plainly because if they didn’t otherwise, people would assume they WERE advocating re-regulation.

What does “a balanced approach” mean? Again, this statement is vague to the point of worthlessness. Absolutely consumer protection should be equal to competition, if not tantamount. And yes it should be efficient and fair to customers. Thanks for telling us the obvious.

It is interesting that TCAP just wrote an entire dense, cumbersome document that had literally nothing positive to say about deregulation and left out important facts that might have illustrated it in a positive light. Of course, they say re-regulation is not the answer, but they also go out of their way to attempt to illustrate that nothing about deregulation has been positive.

Let me sum up their “Recommendations” section in one sentence, and keep in mind that I’m not leaving out any important details or specifics:

“Don’t allow anything anti-competitive, make sure ERCOT doesn’t waste money, don’t do anything that increases costs, try to make things easier to understand for customers, and don’t re-regulate.”

Seriously, they wrote a MASSIVE document with nothing positive to say about deregulation, everything negative to say about deregulation, and at the end of the day that distilled sentence is all they have to offer in way of suggestions for improvement. Why would they expend so much time doing research and writing that report if that is all they have to conclude or suggest? They don’t even have any solutions to offer on their webpage, just lots of opportunities to sign various petitions. That seems kind of odd, even lackluster, for a big company that claims to be a consumer advocacy organization, doesn’t it?

In my next post, I’ll take a close look at TCAP as an organization and offer my opinions on their own motivation and agenda.

 

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