Real Price Cuts? Now That Would be Shocking

A war of press releases has started over the bill that kept the House working until midnight Monday.

Senate Bill 482 was sold by House sponsor Rep. Phil King, R-Weatherford, as a cure-all for the electricity market. He kept calling it a price-slashing rebate bill. Rep. Jim Dunnam, D-Waco, sent up a series of procedural challenges that finally killed it.

So why argue against price cuts? Because, as Dunnam said on the floor and in his press release, it was "a sham bill."

On Jan. 1 this year, most of Texas became a deregulated electricity market. The one thing this was supposed to do was cut electricity bills, which has happened – but only because many companies had held them artificially high after natural-gas prices soared, then dropped, in the wake of hurricanes Katrina and Rita. Since dereg, many firms have voluntarily dropped their prices, but that's from levels that the Public Utility Commission of Texas, the state's energy regulators, called "above-market."

King's failed bill ordered a 10% price cut against the Dec. 31, 2006, prices. This would actually be less than many firms have already put through. The price wouldn't shift at all, but King and Senate author Troy Fraser, R-Marble Falls, would have looked like heroes.

In a weak defense, Rep. Sylvester Turner had begged the house to vote for it because, well, it was the only rebate on offer. Except that it would have given some firms the ability to push prices back up to King's 10% level.

What the bill mostly did was ease the proposed sale of TXU to Texas Energy Future Holdings LLP. Almost none of its terms for the sale or how TXU would look or operate after the sale was new – or, in fact, anything that TEF or TXU weren't already doing. King's press release even touts the reduction of TXU's planned new coal plants from 11 down to three – even though this, again, was already a done deal. Many energy-market watchers always suspected that high number was never a serious proposal but intended to make the three look like a conciliatory step back – rather than a big push for coal.

King claimed the bill would force the new-look firm to abide by an "enhanced PUC code of conduct" – something the PUC could not confirm, because the bill had been altered so heavily in the last days of the session that they were unsure of its final, rejected terms. In fact, as Dunnam pointed out, it would actually have hamstrung the PUC and cut the fines it could levy against firms.