On Thursday afternoon, my electricity went off for an hour, which was the fourth time I lost power that day. Three weeks ago, it went out for almost two hours. Meanwhile, four electricity retailers have failed in the past three weeks, and rates have spiked again -- just in time for the summer air conditioning season. And if that isn't enough, the agency that oversees the Texas power grid has indefinitely postponed a scheduled system improvement that was supposed to bring it into the 21st century -- and it's not saying exactly why.
The Texas electricity system is broken, and the Legislature had better fix it. If Allen Vaught or Bill Keffer want my vote in November in their race for the Texas House, they need to tell me how they're going to do it. Otherwise, I'm not voting for them.
We still pay some of the highest rates in the United States, even with our "free market" reforms. I put free market in quotes because the market is not free. It's impossible for it to be free, because the demand for electricity is inelastic. You can't substitute something else for electricity to drive down the price, in the way you can buy chicken if beef is too expensive. We can't live in a 21st century world without electricity, so the providers have no incentive to lower rates. In addition, we haven't seen any technological changes that might lower the price, the way we have with phone service. We still get electricity the way we did when Thomas Edison invented the light bulb more than 100 years ago, over wires from the power station to the house.
Even Houston Mayor Bill White -- hardly a Trotskyite -- has had enough: "It’s time to admit ‘the emperor has no clothes.’ Electricity deregulation has failed to lower utility bills,” he said.
I am enough of a realist to realize that we won't go back to regulation, no matter how appealing. Last session's TXU adventure, in which the utility's new owners got their way despite an overwhelming public demand for reform, means that any change will have to come within the framework of the current system. Which is fine with me, as long as we can fix what's broken.
So there's the challenge, gentlemen. Nuts to the rest of the junk that you might throw around during the upcoming election. I don't care about DART or homeland security or taxes or toll roads. I want electricity system reform that will guarantee reliable service and honest competition. I don't think that's asking too much. Do you?
Your problems Thursday may have been caused by the high winds. But I agree that deregulation is a joke perpetrated by crooks masquerading as free market believers.
Posted by: Lee G. | Jun 06, 2008 at 07:47 AM
Deregulation is a good idea. Market forces on average deliver far better results than government regulation in ensuring reliability, low price, and choice. This system isn’t a failure just because electricity isn’t free. A few years is but a wink of time for the capital-intensive, slow-moving utility industry.
And I think you’re misunderstanding stuff. Sure, the "grid" and the wires are monopolistic, but the generation isn’t. Simplistically put, TXU, Entergy, etc. only need generate enough power to offset actual consumption. (Yes, I know it's more complex than that, but proper regulation :-) can "shim" through the complexity.) This incentivizes utilities into producing cheaper electricity. I guarantee you, the first utility that delivers cheap electricity in Texas will be rich.
Electric demand is not completely inelastic. We can choose thermostat settings, insulation, energy-efficient lighting and appliance upgrades, etc.
Also, don’t forget spikes in energy prices. Comparatively little of Texas’s power generation comes from cheap coal. See http://www.window.state.tx.us/specialrpt/tif/energy.html; compare to national average at http://www.eia.doe.gov/cneaf/electricity/epa/figes1.html. We’re far more sensitive to price fluctuations in natural gas and oil than the rest of the country. I don’t have time to do the calculations, but I’ll bet that alone accounts for the vast majority of price increases.
Don’t throw out the baby with the bathwater!
Posted by: Aren Cambre | Jun 06, 2008 at 12:25 PM
We might have known that Aren "Traffic Signals Restrict My Sacred Freedom of Movement" Cambre would endorse the confidence trick that deregulators have pulled on Texas consumers. This belief in a "free market" operating serenely above and beyond the manipulations of speculators, crooks, Republicans and other lowlifes is, uh, naive, to put it kindly. There is no such thing as a free market operating independently of human activity in that market, and such a system was made to be gamed by those with influence and legislative protection. Regulation, properly administered and fairly enforced, protects consumers from ripoffs like the one going on now in the electric power business.
Posted by: Lee G. | Jun 06, 2008 at 12:49 PM
It's Saturday morning -- our power has been off since Friday morning at 7 a.m. We boarded our pets and stayed in a hotel last night. Each time I've called TXU and give them my account number/address, they have to have me spell my name and take my telephone number. I'm so annoyed I'm cross eyed. Power outage -- okay, stuff happens. Can't locate a 10 year plus customer in their database? REALLY annoyed.
Posted by: BA | Jun 07, 2008 at 10:26 AM
The argument isn't about regulation vs. deregulation. It's whether deregulation has worked, and it hasn't. Aren says "I guarantee you, the first utility that delivers cheap electricity in Texas will be rich." They're already rich. TXU's revenue in 2006 was more than $10 billion (from hoover.com) and Reliant's was more than $11 billion in 2007. I can keep my thermostat at 80 in the summer (which I do), but it's not going to make deregulation work any better. Deregulation is about competition, not about conservation.
This deregulated market was rigged from day one with the so-called price to beat, which based electricity prices on natural gas prices. That's a failure of the Legislature, and why I'm so angry. They took the campaign cash and didn't think past depositing the money in the bank. Then, when gas prices went down, electric prices didn't -- and legislative leaders were shocked. But why should they be? Electricity providers have no incentive to lower prices. What am I going to do? Go off the grid? Be kind of hard to blog with my hamster-powered generator.
And we're told to be happy about it, because it could be worse. I saw Pat Wood, who used to be the federal energy czar, in Houston at my wind convention last week. He said we should consider ourselves fortunate because electricity prices have only increased by one-third over the same period that gasoline prices have tripled.
With good luck like that, who needs bad luck?
Posted by: Jeff Siegel | Jun 08, 2008 at 10:37 AM