Saturday, December 9, 2006

TXU may find itself the target of irritated lawmakers when the 80th Texas Legislature convenes Jan. 9. That's the word from state Sen. Troy Fraser, R-Horseshoe Bay, who singled out TXU with some blistering criticism during an interview this week with the Star-Telegram.

Senator takes aim at TXU

Sat, Dec. 09, 2006

AUSTIN - TXU may find itself the target of irritated lawmakers when the 80th Texas Legislature convenes Jan. 9.

That's the word from state Sen. Troy Fraser, R-Horseshoe Bay, who singled out TXU with some blistering criticism during an interview this week with the Star-Telegram.

The influential chairman of the Senate's Business and Commerce Committee, who characterized TXU as a major culprit for many of the problems with the state's electric-deregulation law, said that TXU appears to control too much of the market and that it has racked up record profits by abusing its customers.

He said that he will seek input from industry leaders as to how to make corrections to deregulation during the upcoming session but that he did not expect to hear anything useful from TXU.

"Right now they're a big part of the problem we're having -- they have had the opportunity to treat their 2 million customers fairly, and they chose not to," Fraser said.

His tough stance comes against a backdrop of increasing public dissatisfaction with deregulation -- he and other lawmakers report regular complaints from their constituents -- and just as the final major price control under the law expires Dec. 31.

His comments also parallel statements he made to TXU CEO John Wilder during a legislative hearing last month. It appears, however, that Fraser is now going in suggesting that legislative corrections could come at the expense of the North Texas electric provider.

Anti-competitive practices

Fraser said the company has been linked to anti-competitive practices in a previous Public Utility Commission report. A bankrupt competitor has also made similar allegations, and various other public-utility reports have indicated that the company's sizable wholesale market share in North Texas gives it undue influence on prices.

The company has stood by its market practices and said the reports have not found proof of wrongdoing.

On Friday, spokeswoman Sophia Stoller cautioned against making major changes to the deregulation law and said it offers plenty of relatively low-cost electric deals for consumers.

She said TXU remains committed to working with Fraser and other lawmakers during the upcoming session.

"We have had several discussions with Senator Fraser ... and Senator Fraser has expressed some concerns -- we're working with him and others to find solutions and address concerns," Stoller said.

Fraser enumerated several adjustments to the deregulation law but did not endorse any. Some possibilities include limits on how much wholesale generation companies like TXU can control in specific regions or legislation to force TXU to divest itself of its retail operations or its wholesale operations.

"The concern is that there are market participants who have too much market power in both the wholesale and retail area," Fraser said.

He said lawmakers may consider legislation that would allow cities to group together large blocks of customers and negotiate a single aggregated price for them.

Under the proposal, customers would be part of the aggregation group unless they chose to opt out. Fraser and his counterpart in the Texas House, state Rep. Phil King, R-Weatherford, have not supported similar proposals during previous legislative sessions.

But both now say that it may be time to consider new options.

Lowering electric bills

"We're not going to go back and re-regulate," said King, the chairman of the House Regulated Industries Committee. "The toothpaste is already out of the tube with deregulation. But we've got to make some substantial changes."

Fraser said that whatever happens during the legislative session won't come without resistance from the industry. He predicted an onslaught of lobbyists from TXU and other companies -- "it'll be like the lobby full-employment act" -- because so much money is at stake.

"We're talking about an issue that involves a lot of money, so I would not be surprised to see the [industry] start hiring a tremendous number of lobbyists," Fraser said. "We have to address why the market is not responding."

But Stoller of TXU said the company has not increased the size of its lobby team this year. She said company lobbyists benefit government leaders by providing them with information regarding the views of the company's shareholders and customers.

"We strongly believe, as other companies do, that this is part of the government process," she said.

TXU spent as much as $3.2 million on 52 lobby contracts in 2005, the last year lawmakers met in Austin during regular session, according to Texans for Public Justice, a political watchdog group. The organization said the company's lobby spending was second only to AT&T.

Texans for Public Justice reports that several other players in the electric industry also typically spend millions of dollars on lobbyists.

They include the Association of Electric Companies of Texas, an industry umbrella group, which spent up to $1.6 million in 2005; Houston's CenterPoint Energy, which spent up to $1.5 million in 2005; Entergy-Gulf States, which spent up to $1.1 million that year; and American Electric Power, which spent up to $735,000.