Watt's Wrong

Consumer and environmental groups backed out of talks last month with legislators interested in filing a bill calling for deregulation of Texas' electric industry. Tom "Smitty" Smith of the consumer watchdog group Public Citizen, who was among the consumer and environmental advocates who walked away, lists three concerns that he says pro-deregulation forces refused to adequately address:

* STRANDED COSTS. Naturally, the state's utilities want those costs covered in a deregulated environment. But consumer advocates want a more equitable solution than what is currently available to consumers. "Austin residents pay 40% of their monthly bill toward the STNP," explains Smith. "We didn't want rates to go up for any customer class, but the way things were presented, the rates would be frozen in allocating those stranded costs in a way that was unfavorable to residential users, and favorable to business." For instance, the majority of expenses incurred to service residents lie in distribution, a relatively small portion of a utility's overall investment (21%), while most expenses incurred servicing larger industrial users lie in costly generation and transmission (78%). Wouldn't it be fairer, proposes Smith, to place the heavier burden of paying stranded costs on those who are benefiting the most from those investments?

* RENEWABLE ENERGY. Alternative energy sources like wind and solar power are more expensive to produce than fossil fuel sources currently used to run power plants, in part because the industry is too small. Studies performed by the consumer groups show that 70% of Texas residents are willing to pay $1 more per month to use "green" sources of energy, but the alternative energy industry has not grown sufficiently to become economically viable. The consumer groups wanted money allocated from electric bills to assure that enough renewable energy resources were built in Texas to create a new industry and help defray the higher cost of renewables today. "The industry representatives were willing to give us five years of funding, but they were unwilling to go long enough and put up enough money to make it work," says Smith.

* ENERGY CONSERVATION. Conservation programs, such as the energy efficient loan programs and abatements offered by Austin's municipally owned utility, are being scaled back across the state as utilities look for ways to trim costs in a more competitive environment. Without sufficient money for programs to encourage energy efficiency and conservation, Smith points out, new multi-family and single-family builders outside city limits have no financial incentives to go the extra mile for more expensive energy-efficient materials and appliances. -- L.C.B.