Electric industry pushes back against bill restricting minimum-use fees

HOUSTON — Electric companies are lining up against legislation that would restrict some fees they levy on their customers, arguing the fees are critical to ensuring they recover their costs.

During a late-night hearing in Austin on Wednesday, the companies argued that “minimum-use fees” — charged to customers who use too-little electricity each month — are fundamental to the economics of some power plans.

Earlier this month, state Rep. Sylvester Turner, a Houston democrat, introduced a bill that would prohibit electric providers from charging those fees, which he said penalize customers who are trying to conserve energy and keep their bills low.

Turner argued that by penalizing customers with low power consumption, the plans undermine the state’s goals of encouraging conservation. He also said the fees disproportionately affect low-income and elderly customers living in small residences.

“If we say we’re a legislature committed to energy efficiency, our methods need to align with our goals,” Turner told his colleagues on the House State Affairs Committee. “We cannot punish people for meeting the standards we set forward.”

Turner said he introduced his legislation as a direct result of a Houston Chronicle investigation published in January that found more than 70 percent of electric plans offered in the Houston area contain terms that may penalize customers who don’t use a certain threshold of power.

Those plans either assess fees on customers whose power consumption falls below a particular threshold — typically around 1,000 kilowatt hours per month — or denies them bill credits that are only available to customers who use lots of electricity.

Critics say those policies discourage conservation as environmental advocates and governments encourage customers to find ways to cut back on power. The fees don’t violate rules set by the state’s Public Utility Commission.

But Turner is likely to face headwinds as he works to pass the legislation. Officials from the electricity universally testified against the bill late Wednesday.

The fees are needed, in some cases, because electric providers spend money on some fixed-costs associated with each customer, regardless of how much electricity he consumes, testified Catherine Webking, general counsel and executive director of the Texas Energy Association for Marketers, an group of retail electric providers.

She also argued that the legislation eliminates options for customers and argued that the fees are clearly disclosed to customers before they enroll in a plan.

“There are products in the market that don’t have this type of provision in it,” added Stephen Davis, an attorney for the Alliance for Retail Markets, another group of electric providers. The Association of Electric Companies of Texas also testified against the legislation.

But consumer advocates who opposed the bill didn’t buy the industry’s arguments. Turner and his supporters argued that while young professionals might be able to figure out which plans have the fees and which don’t, it’s harder for the elderly to parse through the fine print of plans to figure out if using less power will wind up costing them more money.

“A lot of folks are out there, who are doing their level best to save energy and save some money on their electric bill, and find out at the end of the month they’re paying more than they expected,” said Jake Dyer, a policy analyst at the Texas Coalition for Affordable Power.

Turner said he doesn’t buy the industry’s argument that the fees are just a way to recoup costs. He said he’s heard from many people across the state who oppose the fees, and he implored his colleagues to consider consumers.

“Quite frankly, I don’t think any of us would leave the capital and talk at a town hall meeting saying we support minimum use fees,” Turner said. “I can only imagine the response we’d get from constituents if we did.”

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