Our electricity rates are too high and must come down. As a consumer paying high electric bills, both at my home and my small business in Weatherford, I am anxious for rates to decline. This week in Austin, I will work with the Texas House to pass legislation toward accomplishing that goal.
There are two main reasons for our high electric bills. First, most of the increase in the price of electricity is due to the cost of natural gas, the fuel used to produce about 70 percent of Texas electric power. Texas dependence on natural gas to make electricity is much higher than any other state. Just five years ago, when the price of natural gas was $2 per mbtu, this made a lot of sense as it had for a long time. Now that natural gas hovers around $8, it makes no sense at all. This is why we must build new power plants using nuclear, clean coal and other emerging technologies. One of my bills, HB 1386 helps to do just that.
Second, as recent events have shown, a company which owns too many power plants in Texas can easily manipulate the electric market, driving up prices for consumers. Market manipulation cannot be tolerated and must be aggressively prosecuted. That s why two years ago the Legislature created an independent market monitor (IMM) to oversee the behavior of Texas wholesale electric market. The IMM recently discovered violations and the PUC staff has recommended fines of over two hundred million dollars for one company alone.
But Texas must still do more. Recently, the House Regulated Industries Committee (which I chair) passed bi-partisan legislation to reduce electricity rates. HB1189 & HB1190 (SB482 & SB483) bring much needed reforms for reducing rates, improving competition, protecting consumers and prohibiting deceptive business practices.
Although these proposals include immediate electricity rate reductions of 10 to 15 percent and significantly increase consumer protections, much media attention has been focused on the proposed sale of TXU to KKR and Texas Pacific Group of Fort Worth.
Under current law, this sale will be reviewed in differing measure by the Securities Exchange Commission, the Federal Energy Regulatory Commission, the Nuclear Regulatory Commission, the Department of Justice, and the Texas Public Utility Commission. However, some advocates support additional legislation known as the PUC override which, though well intended, will set a dangerous precedent and undermine Texas ability to attract jobs, growth and investment in the future.
The PUC override would actually empower a government agency to retroactively dictate if the sale of a privately held utility may continue even though this transaction was consummated in compliance with existing law. Regardless of how one feels about the proposed sale of TXU (and I have serious concerns), this is a lawful transaction between a willing buyer and a willing seller. For Texas government to change the ground rules by creating a new law after the fact sends the wrong message to those who would consider investing in our state. To attract business, create new jobs and expand our economy, investors must be able to base decisions on economic considerations, not on unpredictable political winds.
Companies who bring jobs to Texas must know that our word is our bond, and for Texas government the law is our word. We cannot create laws which retroactively change the rules and then hope to attract new investors to our state.
In the weeks ahead, I will continue to push for aggressive measures to reduce electricity rates including a thorough review of the TXU sale but I will do this in a way that promotes economic certainty and sound markets, not uncertainty and the growth of government bureaucracy.
Phil King is a state representative from Weatherford who represents Parker and Wise counties as District 61 in the Texas House.
