Star-Telegram | 12/28/2006 | Power costs may slow development

What chafes the North Texans are the lower rates in Austin and San Antonio, whose municipal systems were exempted from the 1999 deregulation law. Austin and San Antonio have emerged as direct competitors to Dallas-Fort Worth in industrial relocations, a point driven home three years ago when Toyota selected San Antonio for a big new car plant.

As North Texans have paid 13 to 15 cents per kilowatt-hour for electricity this year, San Antonio’s average rate was 9.5 cents and Austin’s was slightly above 10 cents.

Both systems, being government-owned, don’t have to pay taxes and can sell tax-exempt debt.

Municipal systems and rural co-operatives have always enjoyed a price advantage because of their tax-exempt status. But the coalition complained in its report that recent increases in North Texas by TXU and its competitors have widened the disparity.

Spare me the comparison between municipal and competitive rates. It makes it sound like North Texas would have competitive rates if only they didn’t have to compete against unfair municipal companies. Well it sounds like that competition within it’s own area hasn’t benefited consumers either.

AP Wire | 12/30/2006 | Electricity market nearing milestone, but will consumers benefit?

On Jan. 1, the state drops its “price to beat,” allowing electricity giants such as TXU Corp. and Reliant Energy to adjust their basic rates up or down as they see fit, without getting approval from state regulators.

Power companies call it a key step forward for consumers, who should benefit from market shifts downward and by shopping around for cheaper electricity.

Consumer advocates, however, say prices are already too high and complain that Texans pay some of the highest rates in the country.

Household electric bills have actually gone up, not down, in the early stages of competition, and they see little sign of any real savings once the regulated price disappears.

And if TXU, Reliant Energy, and others don’t have the ability to sell tax-exempt debt and have to pay taxes, they do have the ability to contribute to political campaigns to get their power plants built. TXU has contributed over $300,000 to date to Texas campaigns. The CEO, Erle Nye, has personally contributed over $200,000 to campaigns. I guess CPS Energy CEO, Milton Lee, didn’t have an extra $200,000 to donate from his $300,000 salary. And TXU can’t be doing too badly if it’s CEO is getting another four million dollars on top of his one million dollar a year base pay.

Want to make a bet? I bet that if the San Antonio market was forced open for competition, the TXU CEO’s compensation package would increase as would the cost of electricity in San Antonio but TXU rate payers wouldn’t receive any benefit. Their rates would probably go up to pay for the CEO’s raise and dividend payments for improving TXU’s infrastructure to keep it competitive.

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