Yo, Arizona! Don’t deregulate your electricity market like Texas unless you want games galore

By Dave Lieber
January 24, 2020

Attention residents of Arizona:

DON’T DO IT!

Don’t let your state regulators deregulate electricity as we did in Texas. I learned about this from Arizona TV reporter Courtney Holmes of ABC15 in Phoenix.

She contacted me because she heard that Texas is, in her words, considered by some to be “the gold standard” of deregulation in the United States.

After I picked myself up off the floor, I enlightened her.

On her newscast, she showed video of me saying: “Competition creates new headaches for consumers. You have to kind of be a math genius to figure out how to find the lowest rate from the best company.”

I explained that confused customers have been sending me complaints for the past decade.

“Electricity companies have figured out how to game the system,” I continued. “Introductory prices are low enough to lure customers in, but once the contract expires, the rates jump.”

I explained about hidden fees, about getting charged for talking to a live agent, about penalties for not using enough electricity.

‘Built on a fraud’

I may have figured out why our system is so messed up.

It’s built on a fraud.

Let’s travel back to the mid-1990s, when a powerful Texas energy company “had begun aggressively advocating for deregulation,” according to a deregulation history published by the Texas Coalition for Affordable Power.

That company’s name?

Enron.

California was the first state to deregulate, based, in part, by a hard push by lobbyists working for Houston-based Enron. But California’s new system fell into crisis when prices jumped from $1 per megawatt hour to $9,999, then back down to a penny. How? Market manipulation.

‘Virtually unchecked’

So Arizonans, Texas leaders can say rates have dropped, but tell that to the Texan who opens her or his electric bill. Add-on fees have that name for a reason.

A 2019 study by Texas ROSE — Texas Ratepayers’ Organization to Save Energy — found 28 different add-on fees used by electricity companies to grab more of your money.

The fees are “virtually unchecked” by the PUC, and sometimes in violation of state law, the report states.

Meanwhile, a 2019 study by TCAP found that the number of electricity-related complaints filed with the PUC increased for the second year in a row and now stands at a four-year high.

TCAP also found that Texans buying electricity from competitive providers historically have paid higher prices, on average, than Texans receiving power from providers exempt from competition.

A report by the Houston Chronicle this month found that while wholesale electricity prices fell nationwide last year, they jumped in Texas.

Read the full column in The Dallas Morning News