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Area has low electric rates

Residents of Upshur County can be glad that the two electric companies which operate here, Gilmer-based Upshur Rural Electric Co-op and Shreveport, La.-based AEP-SWEPCO, have some of the lowest electric rates around.

They are both in the non-deregulated area of the state. And neither is part of the Texas Power Grid.

Despite promises to the contrary, rates for those in deregulated areas have gone up sharply since then-Gov. George W. Bush signed a deregulation bill in 1999.

Residential customers of both Upshur Rural and SWEPCO paid about 8.7 cents a kilowatt hour in June, according to statistics provided by the Public Utility Commission of Texas on its web site.

Those in deregulated areas pay much-higher rates. Customers of deregulated Dynowatt Go Green Variable in central Texas, for example, paid 22 cents a kilowatt hour in May.

An article by Rebecca Smith in Thursday’s edition (July 17) of the Wall Street Journal addressed the problems deregulation has caused for electric consumers in Texas. It referred to what Texas did as as “America’s most audacious experiment in deregulating electric power.”

The article “Deregulation Jolts Texas Electric Bills” stated that “Texas had some of the cheapest power rates in the country when it zapped most of the state’s electric regulations six years ago, convinced that rollicking competition would drive prices even lower.

“This year, electricity there is some of the nation’s priciest.”

The article said the cause of the high electricity prices is “rising fuel costs and mysterious transmission bottlenecks.”

A spokesman for the Public Utility Commission said in the article that “a Texan shopping for electricity today typically would be quoted a price between 13 and 27 cents a kilowatt hour; the national average is between 9 and 10 cents.”

The Wall Street Journal article said that five electricity retailers that sold to homeowners and small businesses have gone under. Customers found themselves with huge electric bills when they were “quietly and seamlessly switched to other, more expensive retailers.”

John Dugan, general manager of Upshur Rural, said that what happened to those retailing companies was that they had long-term contracts to sell electricity at a set rate, but that the electricity they had to buy has gone up in price.

He said such independent retailers “could just walk away” and leave their customers stranded. In contrast, he said “Upshur Rural is in for the long haul. We’re going to be here.”

“What happened when the government deregulated phone service? What happened to the trucking industry? And a prime example is the airlines,” Dugan said. In all instances, prices went up.

Tony Bennett, chairman of the Texas Association of Manufacturers, told the Wall Street Journal that wholesale electric sold to energy-intensive industries such as refineries and chemical plants has also gone way up in price in Texas. He said that power prices were now about half in Georgia and Alabama of what electricity costs in Texas.

As the Wall Street Journal explained, the deregulation, which took effect in 2002, took away most restrictions on what power companies could charge and what consumers could pay.

The article cites a Round Rock resident, who paid $189 for electricity in May. In June, his bill went to $488. Natural gas, used to generate about half the power in Texas, compared to 20 percent for the U.S. as a whole, costs five times what it did in 2002.

The deregulated area is about 75 percent of the state. The northeast and southeast corners of Texas, and much of Northwest Texas (including the Panhandle) escaped deregulation.

So the next time you turn on the air conditioner, be thankful for the reasonable prices of local electricity.


Courtesy Graphic / ERCOT
THE ‘TEXAS GRID’ is illustrated above by the darker blue shaded area comprising most of the territory of the state.

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