Deregulation Through The Back Door

Several years ago, power companies supplying electricity to many parts of Texas were deregulated by the Texas legislature. The Republican legislature promised Texans that the move would result in more competition and lower prices for consumers. They could not have been more wrong!

Before the deregulation went into effect, Texas has some of the lowest consumer electricity rates in the nation. Currently, Texas electrical rates are among the highest in the nation. And it's not because electrical rates have gone down in the other states. The much-vaunted Republican myth of competitive rates simply didn't happen. Instead, the power companies have taken advantage of deregulation to exorbitantly raise their rates.

But there are still a few parts of Texas where electrical rates are still regulated. In the Panhandle, the rates are regulated by the cities. The rates for consumers cannot be raised without city approval. In fact, Amarillo and several other Panhandle cities have just denied a rate increase to Xcel Energy.

In Austin, however, the power companies are trying to pull off an end run around regulation. American Electric Power Company is currently in talks with the Republican-dominated Public Utilities Commission (PUC). They want the PUC to approve "alternative rate-making methodologies" to let the power companies recover "certain costs".

In plain english, this would allow the companies to get around regulations by tacking on extra charges above the approved rate. Amarillo city-staffers say, "There is a significant risk that the adoption of any of the proposed truncated, rate-review mechanisms will be just 'stage one' of an effort to completely eliminate effective regulation of the rates of monopoly electric utilities."

I would go further. It would be the end of regulation, because the company can always make sure the "certain costs" will jack up the bill to whatever rate they want to charge, regardless of what the cities want. Several Panhandle cities are preparing to hire an attorney to fight the new measures. I hope they do.

These power companies cannot be allowed to achieve electric deregulation through the back door after it has been denied at the front door.