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

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

Most people probably haven’t heard of TCAP, the Texas Coalition for Affordable Power. Although, if you’ve read the TER Blog or visited the TER Facebook page with any regularity, you might have seen me comment about TCAP’s public relations face, Recharge Texas. So who is TCAP? TCAP is a membership group of local community politicians who have banded together to negotiate bulk electricity rates. Basically they’re politicians who charge a membership fee and percentage of usage to negotiate the electricity contracts for local government entities:

There is a one-time New Membership Fee equal to the greater of (i) $0.05 per capita of the resident population of the Member  or  (ii) one-half (1/2) of one percent (1%) of the prior calendar year’s total electric bills, not to exceed $14,000.  Also, TCAP members pay a per kWh aggregation fee that is set annually by the Board of Directors.  Over the last three years the aggregation fee set by the CAPP and STAP Boards has been $0.0013 and $0.0010, respectively.  The 2011 fee ranges from $0.0010 to $0.0012 depending upon the member’s location.  Funds raised through the aggregation fee are used to: pay attorneys, energy and public relations specialists; develop and provide interactive web portals for members use; maintain web sites; and promote market reforms that would benefit political subdivisions and their residents.

So why am I bringing up TCAP today? Well, TCAP also claims to be a consumer advocacy group. And yesterday they were blasting out press releases pointing people to a document they put together which they’re humbly calling “Deregulated Electricity in Texas – A History of Retail Competition in Texas.” Apparently they feel themselves the best candidates to write the definitive history of deregulated electricity in Texas. The problem is that their history is completely biased, built by design on faulty, incomplete, and misleading data, offers no constructive ideas or suggestions, and flirts with the personal agenda of TCAP.

I’m going to pick apart their report piece by piece, because to have such a one sided view attempting to paint deregulated electricity in a negative light without highlighting important circumstances, identifying any of the positive results, and shamelessly stating opinions as facts is amoral. And that irritates me. And on top of that, putting this kind of document out there and claiming it is entirely factual is just that much more disinformation Texas consumers have to wade through to understand the truth about the Texas electricity market.

First off, we’ll examine the “facts” that this report claims to examine.

The “Facts” TCAP/Recharge Texas Claim to Examine:

    Number One:

Average electricity prices in areas of Texas both inside and outside deregulation have declined in the last two years. However, Texans in deregulated areas consistently pay more for power than Texans outside deregulation.

This is a blanket statement and is patently false. There are regulated areas much more expensive than deregulated areas, such as El Paso, Entergy, etc. Additionally, Austin, which is regulated, is laughably in debt because they refused to to raise rates for 17 years, a decision that can be tied to political interest over the community needs, and are about to add a $20 surcharge to bills to pay the debt. This will make them the highest paid utility in Texas. Of course, TCAP is knowingly using extremely flawed data to come up with these numbers, but I’ll examine that in extreme detail later.

    Number Two:

The organization that manages the state’s power grid, the Electric Reliability Council of Texas, has proven to be a poor steward of ratepayer money. ERCOT is supported through fees levied on electricity consumption.

No argument here. However, I would like to point out that it is not the first time a government agency has been bloated. Hard to blame the deregulated system for this. That is like saying Democracy is a failure because the 2 party system in the United States creates huge obstacles. ERCOT has had many issues, but TCAP tacitly blaming those issues on the system of deregulated electricity is poisoning the well.

    Number Three:

Reliability issues have begun to emerge under deregulation. There have been two statewide rolling blackouts in four years under the new system, and there have been at least nine reliability emergencies in 2011 alone. By contrast, ERCOT ordered statewide rolling blackouts only once in 30-plus years before deregulation.

This is probably the most angering “fact” they claim to examine. This entire statement is circumstantial and drawing any conclusions about the system of deregulation from the silly weather abberations of 2011 is biased reporting. Reliability issues have come about under deregulation yes, but this statement is tacitly tying them directly TO dergulation. Not one of the hottest summers in Texas recorded history, the worst drought in the Texas region since the late 1700’s, and a 20% population increase since 2005. None of the items I mentioned are highlighted once in TCAP’s entire document as important factors despite the obvious common sense connection. Shockingly enough, extra homes to power require more electricity and weather aberrations have caused problems. But last I checked, the deregulated electricity can’t control the weather or the influx of new residents into the state.

    Number Four:

The Texas Legislature has failed to act on important reforms, including proposals to guard against market abuse. The Legislature also diverted money from a bill-assistance fund that was meant to help low-income ratepayers, and instead used much of the money to balance the state budget. This reversed a key commitment included in the deregulation law.

Unsurprisingly, policians making poor decisions is nothing new. Again, this doesn’t make deregulation a bad system. Tying it in with politics is specious. As for the bill assistance fund, again, that was a political decision by Rick Perry. How is that the fault of the deregulated system? And as an interesting piece of irony, TCAP is an organization made of city politicans who want to repeal the Texas elimination of opt-out aggregation, which drastically reduces their power. So they’re mistakenly blaming electricity deregulation for political mistakes, all the while being a collection of politicians that want to insert a layer of political control between customers and electricity companies. Nothing hypocritical about that at all.

Key Questions Raised in “Deregulated Electricity in Texas” Include:

  • What can be done to reduce confusion in the retail electricity market?
  • What reforms would help guard the deregulated market against anti-competitive abuse?
  • How can policymakers guard against waste and inefficiency at the organization that oversees the power grid?

Deregulated Electricity in Texas, first published in 2009 but now updated and expanded, tells the story of electric deregulation from the beginning. It includes sections summarizing key milestones, new pricing charts and updated spotlight articles highlighting key policy challenges.

I read their entire, rather large document, multiple times. I can’t recall where any of these questions were specifically raised. And there certainly weren’t any proposed answers to those questions. As for “telling the story of electric deregulation from the beginning” well, I would certainly argue that their document tells A story.

In my next section I’ll take a look at TCAP’s “Major Findings” section one by one and respond to their claims, specifically their flawed pricing charts and milestones. Stay Tuned.


Leave a Reply

Your email address will not be published. Required fields are marked *

* Copy This Password *

* Type Or Paste Password Here *

This site uses Akismet to reduce spam. Learn how your comment data is processed.