Dallas Pays More for Electricity than Austin or San Antonio. Thanks, Deregulation.
Dallas is the light blot up top. The expensive-looking one.
There exist, floating around the Internet and stuffed into the filing cabinets of public-interest watchdogs, an trove of eminently credible reports and white papers explaining in painstaking detail why and how Texas' decade-old experiment with electricity deregulation has failed. But there's an easier way to show how the free market has screwed over the state's electricity-using humans: compare rates in the small number of Texas cities (Austin, San Antonio, San Marcos) that own their electric utility and thus weren't directly affected by deregulation with rates in the large number of cities (Dallas and pretty much everyone else) that were.
That this comparison can be made is a historical fluke. Tom "Smitty" Smith, director of the Texas office of Public Citizen says Texas' municipal and cooperatively owned electric providers tend to be in Central Texas, "where historically they were settled by German utopians and populists. There's a long tradition of community ownership of assets." This, and a push for economic development, drove Austin to establish a public electric utility in the 1890s. San Antonio's came later, after it took over a private provider that went bankrupt after World War II, unable in peacetime to handle the debt incurred it had incurred serving the city's military boom. Dallas and Houston, by contrast, have always had private utilities.
Before deregulation, private companies operating as a regulated monopoly with the advantage of scale offered similar or slightly lower rates than municipal providers or co-ops. After, the picture was flipped for reasons that seem rather obvious in retrospect.
"It is because they [municipal providers] are managed for the benefit of the community as opposed to making profits," Smith says. "And then, secondly, the [private utilities] when they deregulate it, they are split between the generation company (e.g. Luminant) the distribution company (e.g. Oncor) and the retail company (e.g. TXU), each of which is making a profit on selling you electricity."
The results can be found on the Public Utility Commission's webpage by anyone with the tenacity to navigate the site. Here's how it breaks down for June 2014: In Austin, a residential user consuming 500 kilowatt hours of electricity paid $52.35; in San Marcos, $52.64; San Antonio, $55.67.
Average price across municipal plans: $53.55.
In the Dallas area, for the same month and same amount of usage, TXU's cheapest plan costs $69.79; Ambit's is $66.58; Reliant and others offer plans in the mid-$50 range, but they are all variable-rate plans customers tend to hate, in which the price per killowatt hour can inexplicably skyrocket from one month to the next.
The average price of each private company's cheapest plan: $59.82. Remove the variable-rate options, and the average becomes $63.69.
In other words, the hard-working people of Dallas are paying somewhere between 12 percent and 18 percent more for electricity than that good-for-nothing layabout nephew in Austin.
So even though people in Dallas have the privilege of choosing their own electric provider -- if navigating the arcane, often intentionally misleading pricing plans can be considered a privilege -- they won't be able to alter the stubborn truth that putting electricity in the hands of three separate companies, each with an eye toward producing a return for its shareholders, will be more expensive than a publicly controlled entity ultimately beholden to the taxpayer.
Nor is there any realistic hope to change the system. Deregulation certainly won't be rolled back, and if it were ever seriously proposed that Dallas supply its own electricity, you can bet the industry would have local politicians pinned to the mat in an eye-blink.
Send your story tips to the author, Eric Nicholson.
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