Texas: Where Citizens and Consumers are Cattle for Corporations

Ideas and Issues

February 21, 2021

            Pearl River     The polar vortex hitting Texas has been devastating with tragic deaths, no electricity or gas for millions for days, unpotable water, and Ted Cruz. Worse, it’s not over yet by a long shot. In recent years Texas has been a market-driven experiment in hyper-conservative economic policies in many areas, but especially in the way it looks at utilities as not public goods, but private corporate playthings. Remember Enron? What did they learn? What could go wrong when the so-called “models” break down, reveal their predatory nature, and convert consumers to road kill? Everything it turns out. There are no heroes in this story.

Texas is its own power grid, so when catastrophe strikes, there’s no cavalry coming. It’s all frontier justice. Add to that the fact that in Texas the utility energy market is now completely unregulated. In the 1970s, when ACORN was fighting price hikes by gas and electric companies throughout Texas, I’ll have to admit that the Texas Utilities Commission was so under the thumb of the big companies that it was virtually a captive audience for whatever play they wanted to put forward, but now it’s all katie-bar-the-door with 220 companies selling and the consumers trying to sort it out.

When power went down in the storm, revealing the fact that none of these companies, gas or electric, were adequately prepared for nature’s ferocity, the Texas Utilities Commission, believing in the anarchy of the free market, let the price go to the maximum of over $9 per kilowatt hour. Take a deep breath and contemplate the outrageousness of a governmental body allowing residential consumers to be charged such a price. Unregulated, indeed, and irresponsible to boot!

Let me explain. In the 70s, we fought for “lifeline” utility rates for senior citizens and lower-income families for a fixed price for the first 400 kilowatt hours. The average price in the US per kwh is now 13.31 cents and the average usage is more than double our lifeline level at 877 kwh per month for residential customers or about $54 per month. Louisiana is one of the lowest at 9.9 cents per kwh, and Arkansas is now 10.59 cents per kwh in the bottom ten. Before the storm, Texas was 23rd highest in the country at $12.2 cents per kwh. Given the TUC’s action, lifeline rates for 400 kwhs at $9 per kwh would be $3600. At average usage, a Texas bill would be $7893 for the month. You see where I’m going with this now?

If you were “lucky “enough in Texas to keep your power on and humming, you were unlucky in Texas when you found that your bill might be not $100 or $200 this month, but $8, $10, or $15,000 or more. To compound the problem, if you trusted the companies and the banks, maybe you allowed them to automatically deduct your utility payment from your account.           Let me quickly add that in my family I’m an object of derision, sometimes falsely ascribed to my age and stubborn resistance to some parts of modernity, but the day I let any corporations and banks automatically take money from my account, outside of my own control, then feel my pulse, because I’m gone. I’ve fought all of these folks all my life, so I’m not giving into them now.

Nonetheless for some people convenience or something is more important. The Times talked to a woman where the bank allowed the energy company to suck everything but $200 out of her account on a bill over $6000. Another guy had a company deplete his savings of more than $16,000. Incredible!

The Harvard professor who came up with this hairbrained, caveat emptor, bloodsucking energy markets scheme was OK with all of this.  According to the reporter,

William W. Hogan, considered the architect of the Texas energy market design, said in an interview this past week that the high prices reflected the market performing as it was designed. The rapid losses of power — more than a third of the state’s available electricity production was offline at one point — increased the risk that the entire system would collapse, causing prices to rise, said Mr. Hogan, a professor of global energy policy at Harvard’s Kennedy School. “As you get closer and closer to the bare minimum, these prices get higher and higher, which is what you want,” Mr. Hogan said.

Maybe that’s what he wants, but it’s not what anybody else would have wanted. Texas Governor Abbot, a rightwing ideologue of the first rank, is reeling from this crisis on top of the failure of the power grid.  He held an emergency meeting with legislators in the Republican majority that abetted this crisis to see if there was a way to cover the family-by-family disaster that energy bills are now causing.

Abbot and the boys were probably as confused as many citizens. When they kept parroting these free-market schemes that may have looked good in ivy covered campus settings, they forgot about their old dicta that there’s “no such thing as a free lunch.” When there’s no government regulation and nothing but corporate rent seeking, someone is always going to pay when the buck gets passed and that means citizens and consumers. The ideologues are trying to cover the losses, but they should all have to pay for this foolishness as well by looking for new jobs where they can do less harm to people.