Statement of CAPP general counsel Geoffrey Gay relating to NRG’s announced acquisition of Reliant.
Today’s announcement that electric generation giant NRG will acquire Reliant’s retail business for $388 million could spell more trouble for consumers. The Texas electric deregulation law was adopted in 1999 with a prohibition against generators controlling more than 20 percent of the statewide market. The problem is that a handful of companies – NRG among them -- already control far more than 20 percent in the smaller regional markets where they operate. These companies are the proverbial big fishes in small ponds. Such large operators have the ability to affect wholesale energy prices, even unintentionally.

CAPP's recent report on the History of Electric Deregulation in Texas relies upon the most recent annual data from the federal United States Energy Information Administration.  Annual data – as opposed to monthly data – provide a clearer picture of long-term pricing trends. CAPP's study shows that electric prices have increased under the deregulation law.

It’s been suggested that Luminant’s recent decision to retire or mothball 12 older gas-fired plants is just another example of the invigorating powers of that tonic known as electric deregulation. The plants in question are all 40 and 50 years old. Under the deregulation-cures-what-ails-you argument, it's competitive forces that prompted Luminant to mothball them. That decision, in turn, will result in new efficiency gains for the market.

But how will those gains ever benefit consumers?

A nodal project originally estimated to cost ratepayers as little as $59.7 million is now projected to cost $658.7 million under a budget approved this week by the ERCOT board.  All consumer representatives voted against the new spending plan.

ERCOT also approved a new December 2010 go-live date for the market transition. The original implementation target was for the fall of 2006.

The state House committee charged with considering key electricity issues has a veteran lawmaker for its new leader. Carrollton Republican Burt Solomons, who this year begins his 8th term in the Texas House, was named Feb. 12 to helm the newly reconstituted State Affairs committee. He previously chaired the House Financial Institutions committee and was chair of the Sunset Advisory Commission in 2005, when the Public Utility Commission underwent the sunset review process.

Former state Sen. David Sibley, co-author of the Texas deregulation law, recently suggested to a reporter that he linked wholesale energy prices to natural gas pricing in Senate Bill 7 as a way to discourage the production of new coal plants and to phase out old nuclear generators. He said this was a concession to environmentalists.
 
In fact, that linkage has had the opposite effect.
 

 In 1999, then-state Sen. David Sibley, co-author of the Texas electric
deregulation law, said this about his law: "If we don't get consumers
lower rates, then we have been a failure - I'll be the first to say it."

But under Sibley's law, electric prices in Texas have not just gone up,
but way up. CAPP's new report on the history of deregulation shows that
before Sibley's law, Texans paid rates below the national average. After
the law restructured the market, Texans paid above the national average. 

Two Democratic lawmakers say they’ve come up with a nifty way to fund renewable energy projects in Texas.
 
Take the money from funds administered by the governor.
 
Senate Bill 542 would allocate money from the governor’s Texas Emerging Technology Fund not already allocated for medicine, bio-technology and life science projects to go to projects that promote the development of low-carbon fuel, low-carbon electric generation strategies, energy efficiency and new ways to store power. State Sen. Kirk Watson, an Austin Democrat, filed the bill on Jan. 26.
 

CAPP Chairman Jay Doegey has issued the following statement about an industry-sponsored report issued this week by Waco economist Ray Perryman.
 
 “We agree with Mr. Perryman’s findings that Texans have paid more for electricity since the Legislature deregulated the state’s retail electricity market 10 years ago. But it’s time to stop falling back on the same tired industry excuses for those needlessly high electricity prices and start coming up with real solutions.
 

A proposal to streamline the ratemaking process -- described as an “emerging issue” in the most recent Scope of Competition report by the Texas Public Utility Commission -- has been temporarily put on hold by the agency. Some lawmakers apparently don't want the controversial issue to come up at the PUC until they adjourn sine die, on June 1. Otherwise, “the Commission would have taken the issue by the horns,” PUC Chairman Barry Smitherman said during the panel's Jan. 29 meeting.