Steffy: Sunset panel is no friend of power consumers

It didn’t take the Sunset Advisory Commission long to leave consumers in the dark.

On the second day of the legislative session in Austin, the commission, the legislative body designed to eliminate waste and inefficiency in state agencies, voted to strip consumer protections from a bill proposing changes to the Public Utilities Commission.

The decision overruled recommendations by the Sunset Commission staff that included granting the utility commission the ability to levy heftier fines for abusive practices in the state’s deregulated electricity market.

As our deregulated electricity market falters, as it fails to create incentives for desperately needed generating capacity, legislators, like regulators, have focused far more on helping big generating companies than protecting consumers.

“The Sunset Commission completely ignored their responsibility to protect consumers and the marketplace from abuse,” said Tom “Smitty” Smith, the state director for the consumer group Public Citizen.

The Sunset Commission’s staff recommended raising penalties that the utility commission can levy for companies caught manipulating electricity markets to $100,000 a day for each violation. Currently, the penalties are capped at $25,000 a day.

Sen. Brian Birdwell, R-Waco, pulled that provision before the discussion even started, and no one else on the 12-member panel bothered to address it.

Found to be ineffective

The staff had recommended raising the penalties because it found the current $25,000 cap meant fines weren’t effective in preventing companies from violating market rules by restricting the amount of available power and potentially creating blackouts.

As if to underscore that point, the utility commission recently released records that show for blackouts in February 2011, it fined eight companies a total of $368,000.

One of them was Luminant, the state’s biggest generator, which the utility commission said failed to provide power as required under the rules of the state’s grid operator. The generator faces a total penalty of $125,000, though the fine is still pending, according to utility commission data.

‘Brushed off’

A company of Luminant’s size, though, won’t be deterred by such a small fine.

“For many of them, a $25,000 fine gets brushed off as the cost of doing business,” Smith said. “The Legislature time and time again has recognized how disparate the power is between the average electric consumer and the behemoth electric companies that serve them. This sort of limited government theory belies that long history.”

With the higher penalties dismissed, the Sunset Commission quickly moved on to a proposal that would have allowed the utility commission to issue emergency cease-and-desist orders in cases against companies engaging in harmful market activity.

Under the current system, the utility commission first must issue a notice to the company, then hold a hearing before ordering it to cease the harmful practice, a process similar to many state licensing agencies.

Sen. Dan Patrick, R-Houston, removed the provision, arguing that stopping fraud had nothing to do with protecting the reliability of the grid.

“The kinds of abuses and the money involved when tens of thousands of consumers are overcharged by an electric utility are different from the kinds of overcharges that might occur when you go to a barber,” Smith said.

While reliability is an important part of the utility commission’s responsibility, since the 2011 blackouts, it has focused on the issue to exclusion of any concerns about the potential cost to consumers.

Too few power plants

Thanks to the deregulated market’s structure, generators aren’t building enough new power plants to meet the state’s needs. Texas’ deregulated utility market is failing on its fundamentals, and the generating companies, the utility commission and apparently some of our elected officials now advocate more government intervention in the allegedly free market.

That’s why the utility commission has doubled wholesale price caps in the past year, and it’s planning to do so again in the next few months. Generators also have proposed creating a secondary market that would provide additional reserve capacity, but that, too, will cost consumers more.

Rather than adopting safeguards to protect consumers, the Sunset Commission, much like the utility commission, has thrown its support behind the generating companies.

The Sunset bill still must go through the legislative process, so it’s possible that some of the provisions removed last week will be added back in.

In the meantime, though, the Sunset Commission has lived up to its name, turning out the lights on consumer protection.