LOCAL BUSINESS
Houston pays more for the same energy
03:58 PM CDT on Wednesday, May 28, 2008
HOUSTON -- Here in Houston, we’re known nationwide for our unbearable summers, but maybe we should be known for the unbearable cost of trying to keep cool.
We continue to have some of the most expensive electricity in the nation, and it may only get worse.
Outside the offices of Houston’s biggest power company, Reliant Energy, people told 11 News about their worst monthly bills.
Tonya Carter’s: $500.
“That’s the reason we can’t go to the mall and we don’t go to the cleaners as much, because you need your lights and you got to get to work,” Carter said.
It’s not like this everywhere. Texas is one of only 14 states that has stopped regulating the price of electricity.
The result?
“Rates charged to household consumers have been skyrocketing not only in Texas, but in every single state that has adopted deregulation,” consumer advocate Tyson Slocum said.
It’s now been a decade since Texas lawmakers deregulated the electricity industry, and we’ve been tracking it ever since, hearing your complaints about sky-high bills and confusing contracts. Where do things stand now?
Average monthly bills for summertime usage have made a steady climb and are now at about $220 in Houston.
Compare that to the national average for the same usage: about $160.
That means electricity in Houston is 38 percent more expensive. Consumer advocates call the difference startling.
“And that is to us is why deregulation is a failure and we ought to think about ending this experiment,” Slocum said.
A failure for consumers but for the electricity industry?
“The industry looks at Texas as a success story,” Platts Energy News reporter Tom Tiernan said. “If you’re a generating company, Texas is a good market to be in.”
It’s simple economics.
Houston is a great place to generate and sell electricity because companies can charge so much more for it than in many other states.
The consumer group Public Citizen found that nationwide, power companies have made $4 billion more in profits by being unregulated.
“Texas companies are literally almost able to charge whatever price they want,” Slocum said.
As proof of that, the group points out that one of the state’s dominant power generators, Luminant (formerly TXU Power), allegedly reduced output in the summer of 2005 to artificially increase prices.
The company denied it, but the state initially proposed fining it $210 million.
Critics say the alleged market manipulation shows how a few big power generating companies dominate the Texas market.
But that’s where this can get confusing.
“I get mine from Reliant,” Jill Holley said.
Ratepayers have been told there’s lots of competition between all these different companies offering you electricity.
“I think we’re with Ignite?” Sarah Hajizade said.
But most of the companies you can choose from don’t make electricity, the simply market it.
They actually buy it from a relatively few big power generating companies, which is why critics say prices in Texas are high: There’s really not the kind of competition that was promised years ago when lawmakers voted for deregulation.
So with hot weather just beginning, homeowners like Carter are bracing for another summer of heat and humidity and some of the nation’s highest costs to keep cool.
Luminant is the biggest electricity generator in Texas.
A spokesperson said the company did not manipulate prices back in 2005. The company blames high prices on the cost of natural gas which the company says is used in Texas to produce electricity more than in other states that use coal, which costs less.
Inside KHOU.com
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