05 August 2008

Electric bill frying your budget? Here's why!

Texans, already blistered by scorching-hot, triple-digit temperatures on thirteen of the last fourteen days of July, are also being scalded by some of the highest electric rates in the nation. While the likelihood for relief from the heat is only a couple of months away, relief from the high rates is even further off.

The Energy Information Administration (US Dept. of Energy) ranks Texas as 14th in the nation in average cents per residential kilowatt hours in a report updated in January ’08. Our neighbor, Louisiana is ranked at 20th, New Mexico 28th, Oklahoma 29th, and Arkansas 33rd. The national average is 8.9-cents per kilowatt hour. The Texas average is $10.34.

No wonder that TXU Energy and Reliant Energy, which are listed at number ten and twelve, in the number of consumers served, among the top 100 electric companies in the nation, enjoyed revenues which put TXU at 4th in total revenue, and Reliant at 5th, among all the nation’s power companies.

These figures were compiled earlier and reviewed in January, nearly seven months ago. Since then, fuel and food prices have soared and retirement accounts and home equities have tanked right along with the stock market. And, we’ve faced several straight months of creeping recession and net job loss. Older people, retirees, and working families are severely pinched and are having to forgo basic necessities just in order to survive.

But, some are not surviving. Dallas County alone has already reported five suspected deaths from the current heat-wave. Many medical experts believe that such deaths are under reported by as much as 54%, especially among older people, as reported by the Biomedical Market Newsletter.

Over the weekend, Dallas and Fort Worth media reported that first responders are collapsing from the heat.

State Representative, Sylvester Turner (D-Houston), cited such deaths, when calling on the Texas Public Utility Commission, last week, to hold an emergency session in order to adopt Summer Heat Disconnection Rules including stricter standards for disconnections due to defaulted payments. “With these extreme temperatures, our elderly and low-income citizens are suffering”, he said. Turner said that because of high electric bills, people are turning off their air conditioners, posing a terrible health risk.

TPUC spokesman, Terry Hadley, told me that the commission was aware of the letter, but, it was not brought up in their meeting, and that nothing had been scheduled. He said that the “staff will monitor the situation” and could convene within 24-hours should consumer health and safety become an issue.

“But at best, this is a short term remedy that should only be used when health or safety are involved”, Hadley said. “It is not really an economic remedy for higher rates, as at some point those bills will have to be paid”, he said.

Turner’s follow-up news-release, on Thursday of last week, claimed that, “PUC originally said it would provide stricter standards for disconnects during summer months but it has failed to do so”. “As a result”, he said, “electric companies are doing what is minimally required, and people’s health is being jeopardized.”

Underlying all this is the issue of deregulation.

Recently, the Wall Street Journal, under the headline, “Texas Electricity Deregulation Leads to Highest Prices in the Nation”, reported that the plan promising Texans more choices and lower rates has had the opposite results. The article said, in part, that while costs are rising everywhere, that it is worse in Texas. On a steamy day in May, wholesale prices flew to more than $4.00 per kilowatt hour—about forty times the national average.

A study by Ken Rose, a senior fellow at the Institute of Public Utilities at Michigan State University, revealed that while average prices, from 2002 to 2006, have increased 21% in regulated states, the prices in deregulated states climbed 36%.

We’ve already seen the disparity between Texas and other states in the rates paid and revenues generated from deregulation. Average electricity prices here have surged a shocking 58% since 2002.

There is some variation between the deregulated “investor owned” power companies and the regulated municipal and rural co-op companies, but even they “are succumbing to greed”, says Carol Biedrzycki, Executive Director of the Texas Ratepayers Organization to Save Energy, (Texas Rose).

She told me that the summer disconnect rules is only a “band aid to treat cancer”. She says the real long-term solution is to reregulate the power companies. “Currently they set their rates by market based standards rather than cost based. Once they’re forced to revert to cost-based pricing, rates will come down”, she said.

Other states, such as Virginia, have already reregulated power companies while others, such as Illinois, have provided rate-relief packages to consumers, or, have imposed rate caps. Texas meanwhile, urges its citizens to conserve, weather strip, and stay hydrated!

Texas also set up the System Benefit Fund when most of the state's power providers were deregulated. The fund is supported by a 65-cent per 1,000 kilowatt-hour fee. You may, or you may not see it on your electric bill, since some companies note it, and some don’t. But, never mind that, you are paying it, about 65-cents a month.

The fund was designed to provide “discounts” of 10 to 20 percent to qualifying low-income consumers. Even if actually approved and applied, a 10-percent discount hardly suffices for poverty level households already coping with run away food and fuel costs. Also, in recent years the fund has been diverted into the general fund in order to provide a “balanced budget” and claims of “surpluses”.

But, again, all such relief programs merely serve to blur the real issue. Texans, since deregulation, are paying vastly higher electric bills. Even the most conservative analysts acknowledge that reregulation as remedy is on the debate horizon.

Last April, Loren B. Thompson, PhD, writing an Issue Brief for the Neo-Conservative Lexington Institute, said, “Deregulation of electricity generation has become a political hot potato as rising rates convince many users they are being gouged. In some states, such as Texas and Massachusetts, rates have risen over 50% since deregulation occurred at the beginning of the decade. A lot of the increase results from higher fuel costs, but rates aren’t rising as fast in states that still regulate.”

Meanwhile, some legislators, activists, and advocacy groups fight for some form of relief for seniors and working families, while electric bills and temperatures battle to see which climbs the fastest. And, the best that is offered is some assistance and moratoriums on shut-offs, and advice to weather strip, turn up the thermostat, and stay hydrated.

All of which, once again translates to the same old Republican mantra; “You’re on your own!”

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