Tuesday, February 10, 2009

Texas electricity rates soar under deregulation

From the AP via the Houston Chronicle:

The Legislature passed a sweeping deregulation law in 1999 that sought to break down electric company monopolies and remove strict government control over retail electricity rates. The idea was to allow competitive market forces to drive down prices. The sponsor of the legislation, former Sen. David Sibley, acknowledges rates have gone up but said he still considers the bill a success.

Sibley, who now lobbies for power companies and others, blames the hikes on increased natural gas prices. He said Texas is far too dependent on natural gas and would see lower rates if it diversified to coal, nuclear and other energy sources.

“The fuel mix is a problem,” Sibley said. “We’re building nothing but natural gas plants.”

Sibley said the amount of transmission capability, demands from population growth and pressure to reduce emissions can also affect rates.

But the report found that even among neighboring states heavily dependent on natural gas, Texas has higher rates.

Oklahoma and Louisiana, for example, are big users of natural gas but did not deregulate their markets as Texas did, the data shows. Texans currently pay about 10.3 cents per kilowatt hour on average, compared to 8.3 cents in Louisiana and 7.3 cents in Oklahoma, a snapshot of federal data shows.

Ratepayers in Rhode Island and Massachusetts, which have also introduced retail electric competition, saw electricity prices rise by 39 percent and 62 percent between 1999 and 2007, respectively, according to the study.

More here.

I'll just put this in the same file as Texas capping medical malpractice lawsuit awards a few years back: the result was supposed to be lower insurance rates, but...you know...rates actually increased.

Of course, deregulation doesn't always work this way. From time to time, business regulations are outdated, or short sighted, or just plain stupid, and need to be reformed. But this power deregulation stuff in Texas was never in that category. Indeed, like California's power deregulation at the turn of the twentieth century which resulted in rolling blackouts and utterly absurd electricity bills which gave the energy industry ridiculous windfall profits, Texas' deregulation was always driven by the industry being deregulated. That is, all the wondrous price drops that supposedly come from magical, marvelous, deregulated market forces were never demanded by Texas consumers. Rather, the energy industry, which essentially wrote the deregulation bill, pushed its own agenda disguised as being consumer-friendly. In other words, they said it would be good for consumers, but they always knew it would be good for themselves.

In short, this bullshit deregulation was sold to Texans as being good for their pocketbooks, but the energy industry fucking knew that no such thing would happen. Instead, they knew that getting the government off their backs would allow them to fleece Texas consumers. Which is exactly what happened.

Like I said before, deregulation isn't necessarily a bad thing. But in this era where it is now perfectly clear that businesses are totally willing to lie their asses off to customers in order to make a few more bucks, I think it's safe to say that we ought to rely on more than their good word that what they want is good for everybody. That is, deregulation bills should never be written by lobbyists.

Or legislators, for that matter--did you notice how the guy who sponsored the original legislation is now a lobbyist for the energy industry? And we call this democracy.