As noted a few weeks ago, one of the benefits of competition in the Texas electric industry is that customers don’t have to pay for wrong decisions or bad investments made by electric companies.  Since customers can choose their energy provider, they can switch to a new energy supplier if their current provider tries to pass on extra costs from a bad investment to customers, instead of making shareholders bear the cost of a mistake.

Unfortunately, not all areas of Texas are open to competition.  In these areas, including at municipal and cooperative utilities, customers are still on the hook for paying for any unwise decisions made by their monopoly utility.

That appears to be happening at city-owned Austin Energy, where all customers may soon be forced to pay for the city’s renewable energy program, whose costs until now have been paid only by customers opting into the program.

Austin Energy’s latest green energy product, for which it has already bought supplies, isn’t selling as well as expected.  The latest “GreenChoice” offering has been on the market seven months, but only about 1 percent of it has sold.

“If the latest GreenChoice offerings do not sell, their cost will eventually show up in the bills of all Austin Energy customers anyway, officials say,” the Austin American-Statesman reported.  Austin Energy’s rates for city residents are not regulated by the Public Utility Commission, and can rise as high as the utility and city desire.

According to the Statesman, “Some critics say Austin is overcharging for its wind, thereby undercutting GreenChoice.  Mike Sloan, president of local renewable energy consulting firm Virtus Energy, says the city has overestimated various costs and packed in hidden fees.”

Customers, however, are left at the mercy of Austin Energy, and the city council.  Austin residents do not have a choice in their electricity company, and can’t vote with their feet if dissatisfied with how Austin Energy is running things.  Customers who don’t want to pay for Austin Energy’s lagging green power sales can’t avoid paying for the utility buying too much green power, if the utility and city council decide to put those costs into everyone’s rates.  Customers who think the cost of Austin Energy’s GreenChoice product is too high and packed with hidden charges can’t pick an alternative renewable energy plan that’s cheaper.

Texans in parts of the state open to competition are protected from paying higher bills due to a company buying too much green power, while competition keeps renewable power rates low, and free from hidden or inflated charges.

Customer benefits in Texas’ competitive electric market continue to grow, the state’s Public Utility Commission said last week, drawing attention to lower prices available and additional discounts for qualified low-income customers.

“I urge Texans to take advantage of every opportunity to reduce their electricity bill this summer,” said Barry Smitherman, Chairman of the Public Utility Commission of Texas (PUC). “Customers need to be aware of these programs at a time when we’re using more electricity than ever.”

A reduction in energy prices over the past year is reflected in current price offers by retail electric providers, the PUC noted.  Most of the competitive areas, including the Dallas-Fort Worth Metroplex, have several offers below 10 cents per kilowatt-hour (kWh).  That’s less than $100 a month for customers using 1,000 kWh, a benchmark for monthly residential usage.

The prices mean that the current Lite-Up Texas discount for low-income customers goes even farther — but only if customers switch to a lower-priced plan.  Under the Lite-Up Texas program, customers receive a cents-per-kilowatt-hour credit off every kilowatt-hour they consume.  For August, the discount is about 3¢/kWh, meaning if a customer switches to a rate plan that’s 10¢/kWh, the customer will effectively pay only 7¢/kWh for all of their electricity, a discount of 30%.

However, the Lite-Up Texas program is one of several consumer protection and assistance measures only available in areas of Texas open to competition.  Customers who buy electricity from municipal or cooperative utilities, which aren’t regulated by the PUC, are not eligible for the Lite-Up program.

Making your energy dollar go father is easy thanks to SaveOnEnergy.com, which takes the hassle and confusion out of finding a low electricity rate.  Customers logging onto SaveOnEnergy.com simply select their service area and have immediate access to comparisons of electric rates from pre-screened energy suppliers.  Finding a low rate for under 10¢/kWh is as simple as a few clicks of the mouse, meaning customers can save time as well as money using SaveOnEnergy.com.

It’s no coincidence that the greatest technological advancements related to helping electric customers save money are coming in Texas, because the state’s competitive energy market drives innovation and new thinking, Earth2Tech, a green technology publication, said in reviewing advancements in electric industry.

In reviewing TXU Energy’s innovative iThermostat, one of several products in the Texas market that allows customers to better monitor their consumption and save money, Earth2Tech noted:

“But at the end of the day, TXU Energy clearly needs to innovate and deliver new products if it wants to please (and keep) its customers.”

Such is the story of the Texas competitive electric market.  Now that customers can vote with their feet and choose their own energy provider, they can pick the company that best meets their individual tastes and preferences.  If consumers are tech savvy and want the latest gadgets to aid in monitoring and reducing electric usage, they can choose such a company.  If consumers want to buy renewable and green power, they can find such a company.  If consumers want a company offering 24/7 customer service and hassle-free billing, they can find one.  If consumers want to be rewarded for their business, through things like airline miles, gift cards, and bill rebates, they have a host of electric companies to choose from offering all kinds of incentives to win customers’ business. 

All these value-added services aren’t available in most other states, where electricity is sold the same way it was 100 years ago.  A monopoly provider sells a one-size-fits-all product, and consumers have no choice but to take it, even if it doesn’t meet their needs.

In Texas, customers have a choice, and TXU’s iThermostat is only the tip of the iceberg of innovations coming down the pike.  CPL Retail Energy (Direct Energy) recently launched a pilot offering a programmable thermostat capable of receiving communication, combined with energy efficiency improvements.

About a month ago, Oncor announced it had installed over a quarter of a million advanced meters in its service area (mainly Dallas/Fort Worth).  These smart meters are critical to unlocking even greater innovation in the electric industry.  With a critical mass starting to be reached, electric companies are preparing to roll out a host of new and innovative services to change the way customers buy electricity for the better, giving customers more options, more flexibility, and more importantly, more ways to save.

The competitive Texas electric market doesn’t just give customers more protections compared to the old monopoly system; it gives customers more protections compared to customers who live in areas where municipalities or electric cooperatives provide service.

As noted last week, competition doesn’t bind Texas electric companies to rigid tariffs, meaning they can provide higher levels of customer protection and service in order to attract business and better serve customers.  That couldn’t happen in the old monopoly system, since every action and cost was set ahead of time by administrative rule.  It means that today, competitive energy providers can offer extra levels of protection — like voluntary moratoriums on disconnection of service during the summer, even above what the Public Utility Commission rules call for.

However, nearly all Texas municipal utilities and electric cooperatives are not open to competition.  They are also not under the jurisdiction of the Public Utility Commission, meaning they do not have to follow the numerous customer protection rules applicable to the competitive electric market.

That distinction became apparent last week at the Public Utility Commission’s public meeting, in which Commissioners discussed the various protections in the competitive market helping customers avoid disconnection of service during the summer, so customers aren’t exposed to dangerous heat without electricity and air conditioning.  The Commissioners noted that the competitive market does not allow companies to use a “hard disconnect” — that is, a disconnect that stays in place until the customer pays back their past due balance in full.

Instead, under competition, customers who have been disconnected can always have service turned back on by simply choosing another electric company, without having to pay back their balance to their old energy supplier.  This means customers who are disconnected can get electric service restored faster, and have more time to pay back their past due balance while still getting their service turned back on.

However, many municipals and cooperatives do have “hard disconnects” — meaning customers whose service is disconnected cannot get service turned back on until they pay their past due bill in full.  This can leave customers without service for weeks or months as they try and scrape together money to pay their past due bill.  The Public Utility Commission noted that Austin Energy and Pedernales Electric Cooperative, which do not offer competition, both have hard disconnects.

That means in areas without competition, customers are at a greater risk of disconnection, and face a tougher time in getting service restored if they are disconnected.  With competition, electric companies have an incentive to raise their level of customer protections and service, to attract to new customers and build customer loyalty.  It means customers are better off when companies compete for their business.