The past several years have produced all sorts of political and economic sleight of hand, from the governor’s proposal to fund the state’s public schools with a tax on strip clubs to the war on terror, which apparently requires searching my luggage every time I try to re-enter the country.
But TXU Energy seems to have surpassed even those heights.
Last month, the electric utility started giving out its equivalent of frequent flier miles. Turn on the lights, get points. Run your air conditioning, get points. Watch television, get points. Best yet, lucky TXU customers will be able to redeem these points for fabulous prizes, such as hotel discounts and DVDs. Said TXU senior vice president of consumer markets Jim Burke: “This is the first large opportunity that we have as a business to give a broad set of customers a benefit that we believe also has broad appeal.”
Did Jim — and the rest of TXU management — take more than a little puff of their natural gas business before they sold it last year? The only benefit its customers want is uninterrupted service at a fair price, not a $5 copy of Shrek 2 — which would seem fairly obvious if anyone at TXU had their customers in mind.
Which is the catch. TXU doesn’t. The utility is about to reap the benefits of one of those “Gee, the lobbyists say it’s a great idea, so let’s do it” schemes so common to the Texas Legislature. It’s called electricity deregulation, and the only role customers are going to have is to pay.
This is not a diatribe against deregulation, which has given us cheap long distance and BBC America as part of many basic satellite TV packages. Rather, this is a warning to those of us who use electricity — which means every single one of us, of every political stripe — that we’re about get our pockets picked.
Over the next three years, the state will move toward what it’s calling retail competition, in which utilities will be free to sell us electricity at more or less any price they want. This is a good thing, according to the current wisdom, because competition, powered by the invisible hand of the free market, will force the utilities to cut prices to lure customers.
But just the opposite has happened over the past couple of years (a period designed to ease the transition from traditional regulation to competition). In the spring of 2004, I paid TXU 9.76 cents a kilowatt hour. Today, the company charges almost 11 cents a kilowatt hour, which is a 12 percent increase. The so-called competition permitted during the transition raised prices even more quickly. Reliant Energy charged me 8.5 cents a kilowatt hour when I switched from TXU. A year later, the charge is about 2 cents a kilowatt hour more — a 24 percent hike.
The utilities have offered a variety of explanations for this, be it that things will get better when real competition begins or that natural gas prices have skyrocketed. But the real reason is that they know we don’t have a choice. Electricity is not a commodity like lettuce or shoes, something you give up if it costs too much. In fact, it’s something most consumers haven’t even thought about. Only 400,000 of TXU’s 2.6 million customers have left the company during the transition period.
So it’s probably not a coincidence that only three of the 16 utilities that offer service in this area charge less than 10 cents a kilowatt hour (and that difference is just fractions of a penny).
Instead, TXU will go into the travel business. In one respect, you have to admire the company’s spunk. After all its setbacks in the past decade — suffering near-bankruptcy losses trying to sell electricity in Great Britain as well as its reprimand from the state for deceptive marketing — it would seem that it couldn’t have any more tricks up its corporate sleeve.
But it does, assuming we’re gullible enough to fall for it. But we don’t have to. If you want to see a movie, go to the theater. If you want fairly priced electricity, hold TXU — and our legislators — accountable.
