A look at any electricity bill in Houston
will confirm that electricity deregulation of 2003 has been
as ineffective
as homeowner’s insurance reform. Electricity deregulation has been a
huge, costly
failure for the citizens of Houston.
History
In 2003 the Texas Legislature completed the
deregulation of
electricity, lobbied for by Ken Lay and Enron. In return for less
regulation
consumers were promised lower rates through more competition. Instead
there is only
more competition to charge higher rates.
Prior to deregulation homeowners paid 8 cents a kWh
with Houston Light and Power. HL&P generated the electricity,
provided the
long term contacts, the billing service, and maintenance of the grid.
Today, if
lucky, homeowners could lock into a rate of 10.5 cents per kWh (25%
higher) with
a middleman “service provider”. These service providers only provide
the billing service.
Taking advantage of this rate using the tools
provided by
the Public Utility Commission’s website, The Power to Choose, (
www.powertochoose) requires
unreasonable
timing. To benefit from this so called “competition”, a homeowner must
commit
to a contract and their current contract must have expired or they will
face
steep cancellation fees ranging from $100-$350. In this market 10.5 is
a bargain, but most pay a much, much higher rate.
What would Enron say?
Proponents of electricity deregulation will claim
consumers have
the power to choose their electricity provider, along with tools to
watch
electricity consumption, sometimes real time on the net. This is not
what
consumers need. They need reliable energy, with long term contracts, no
cancellation fees, and a fair and reasonable price. These
nifty
tools
haven’t lowered rates, they
won’t lower rates, and in some cases they have cost consumers more for
services
they don’t need.
Proponents will also claim steep price increases
are due to
the cost of natural gas, but according to the US Energy Information
Administration, Louisiana
and Oklahoma’s
electricity is based upon natural gas and their rates continue to hover
around
8 cents per kWh. The only difference? They are still a regulated. Oklahoma
and Louisiana rank 4th
and 9th in electricity prices across the country. Texas
now ranks 37th.
It failed
While Houstonians pay rates as high as 15-19 cents
a kWh,
San Antonians pay 6 cents, sometimes 7 cents during the summer. This
massive
failure has not gone unnoticed by our elected officials. In 2009
Senator Eltife
and Representative Hughes passed SB547 that killed deregulation in East
Texas
citing the failed results in the deregulated areas. It is very clear
the
promises of lower rates through competition and less regulation have
never
materialized.
What’s the solution?
A small group of citizens approached the City of Houston
with an idea. The City has negotiation power resulting in a 5 year
contract at
9 cents a kWh. The citizens asked the City to require their chosen
provider
to offer the same rate to the homeowners and businesses of Houston.
Of
course
consumers
and business owners would always be free to compete in
the
free market and find a better rate if they so choose, but 9 cents for
five years is a relatively great deal.
We believe this idea has merit. The City will not
resell
electricity or provide billing services or customer support. They will
only
negotiate a rate and require the provider to voluntarily offer the same
rate to
its citizens.
This is a win-win.
The citizens win the power to really choose and the providers
win the
opportunity to really compete. And isn’t that
what we really want?