Report encourages market transparency
05/08/2009
Consumers in the state of Texas could save almost $1 billion annually with increased transparency in the electricity market, according to an AARP report released Tuesday.
A decade after Texas deregulated the sale and distribution of electricity, AARP’s report supports legislation to re-regulate the market and calls for a more open system in an effort to support competition and the transfer power to consumers.
“We’re hoping to marshal enough political will in this Legislature to actually start to look at the system and make some of the regulatory and legal tweaks that will start to put consumers in the position of having some kind of power in this marketplace, because they have basically none today,” said AARP state director Bob Jackson in a press conference at the Capitol on Tuesday.
Currently, the Electric Reliability Council of Texas, which was created when the market was deregulated 10 years ago, manages 85 percent of the Texas electrical market.
The council acts as a neutral middleman between service providers in areas in which residents can choose between electrical companies. Residents contact their chosen provider, which then contacts the electric council, which makes the switch, said council spokeswoman Dottie Roark.
According to the report, AARP is promoting transparency in the electric council’s markets by backing a bill sponsored by state Sen. Rodney Ellis, D-Houston, and state Rep. Todd Smith, R-Bedford, that would require the council to report sale offers on its Web site within two days, rather than the current 60-day deadline.
“Markets work best in the light of day,” said report author Robert McCullough. “A market in which you can only find out the activities within it 60 days afterward is inefficient.”
McCullough, who served as an expert witness during the Enron trial, attributes the inefficiency to a lack of competition within the market.
“We get the best prices and most efficient prices if we enhance competition among suppliers,” he said. “Suppliers will not compete if they don’t know what each other is doing, so that information needs to be held in front of us immediately.”
Austin is a municipal power region, excluding the city from council pricing, but city residents only have the option of one power provider: Austin Energy.
McCullough said Austin residents paid about half as much last year on average than residents under the council’s reach. Roark said tightening deadlines for posting offers would be easily to accomplish, as the council currently posts information within 48 hours, according to Public Utilities Commission regulations.
But, bid data remains private for 60 days, which McCullough said would particularly support competition.
Roark also said some of McCullough’s information was inaccurate.
“[In his report], McCullough says ERCOT is exempt from open-meeting and open-record laws. That’s inaccurate. We’re subject to strict open-meeting rules.”
With only 26 more days in the legislative session, the identical House and Senate bills supported by the AARP report have yet to pass through either the House Committee on State Affairs or the Senate Committee on Business and Commerce.
