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Texas could pass legislation that forces utilities into customer choice model

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Christopher Neely's picture
Independent Local News Organization

Journalist for nearly a decade with keen interest in local energy policies for cities and national efforts to facilitate a renewable revolution. 

  • Member since 2017
  • 725 items added with 353,300 views
  • Jan 29, 2021

When the Texas Legislature meets every two years, the governing body of Lone Star State is known for waging battles against the autonomy of its big cities. That will be no different this session but wedged between bills on public safety funding and coronavirus response is a piece of legislation that could impact municipally-owned utilities throughout the state.

Currently, there are 19 municipally-owned electric utilities throughout the state of Texas. Largely, the municipally-owned utilities are the sole provider of electricity for their areas. Central Texas Sen. Charles Schwertner wants to change that and ensure electricity customers in these 19 areas have the opportunity to choose their electricity provider and thus keep them honest.

The bill would require the state-run Public Utilities Commission to survey one-fifth of the municipally-owned utilities that do not offer customer choice and compare their rates over the last five years to similar regions that do allow customer choice. If the PUC determines that the five-year average rate for MOU customers is 10% higher than the rate paid by customers in the similar region with customer choice, the MOU must transition to offer customer choice.

The MOU’s have a year to make the change. If the state’s PUC finds they don’t switch, the state can then assume direct oversight authority of the utility until they make the transition.

“I believe the utility market has matured to the point where we might want to consider allowing the free markets to take a more primary role in all areas of Texas," Schwertner said in a recent interview about the bill. "The customer is paramount in my mind and I think free markets in a mature market should supersede local control in a monopoly.”

Like Schwertner said, most of Texas is already has a customer choice option. But in big cities like Austin, which has the largest MOU Texas with Austin Energy, switching to customer choice could mean a major hit in the city’s electricity enterprise budget, which sends some money directly to city’s general fund.

It will be interesting to see how this plays out. Aside from the impact on budgets, I’d love to hear more about why this may, or may not be, a positive change.

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