• Residential Consumers: The Only Interest Unplugged from the Power Grid

Power PACs spread their expenditures fairly evenly over the two election cycles, spending $2,575,369 in the 1997-1998 cycle. In that cycle, power PACs accounted for five percent of the $51.5 million total spent by all registered PACs.

The floundering of deregulation in the 1997 session cannot be blamed on a lack of PAC grease. Rather, lawmakers failed to produce a bill that all sectors of the power industry could live with. The strongest deregulation advocates—the unregulated wholesale generators that sell wattage to regulated utilities—have been dramatically outspent by investor-owned utilities.

In 1997, for example, a Houston Chronicle analysis found that six key lawmakers wielding deregulatory clout in 1997 took $41,000 from PACs and executives of companies with a direct stake in the issue; 71 percent of this money came from investor-owned utilities¹.  Sen. David Sibley, R-Waco, received more utility money--$17,750—than any other member that the Chronicle tracked.

Sibley has emerged as the Legislature’s deregulation point man. A recent Sibley compromise tosses bones to all the industry players. The interest that arguably gets the shortest shrift is the one without a PAC—residential electric consumers.

Investor Utilities
A major challenge to lawmakers has been the powerful investor-owned utilities, which have long enjoyed monopoly control of their markets. Investor-owned monopolies generated the most PAC power in the 1998 cycle, spending $1,827,159, or 71 percent of the total.

These Big Boys demanded major concessions for the break up of their monopolies. To entice them, the Legislature is promising to:

• Free utilities from the Public Utility Commission; and
• Force residential consumers to eat far more than their fair share of the $3.2 billion in “stranded costs” that utilities incurred through investments in nuclear boondoggles.

Wholesalers
The leading deregulation champions include:

• Private, unregulated, wholesale vendors of electricity that want to cherry pick the biggest industrial consumers from existing monopoly markets; and
• Large industrial electricity consumers (represented by the Texas Coalition for Competitive Electricity) that have the most clout with which to wrangle price concessions in an unregulated market.

While this Lobby Watch focuses on PACs, an earlier edition noted that two top wholesale electricity executives are among the state’s top individual political spenders. Robert McNair of Cogen Technologies dropped least $302,500 on Texas politics in recent years; Enron chief Ken Lay spent at least $129,000².

Coops & Municipals
The only PAC representing the power monopolies run by municipalities and rural coops was the Rural Friends of Texas Electric Cooperatives, which spent $66,520 in the 1998 cycle. Nonetheless, these utilities—the most threatened by deregulation—field a strong lobby presence and enjoy strong rural grassroots support. The coops helped kill deregulation in 1997.

The Legislature placated these utilities by letting them continue to bar competition from their markets. But they may not be able to keep the deregulation genie in the bottle long.

Residential Consumers
Texans most likely to lose out in a deregulated power market are those who exert little to no PAC or lobby influence in Austin—residential consumers. The Legislature has dashed hopes for big deregulation cost cuts on residential power bills by saddling regular Texans with billions of dollars in “stranded costs.”

The residential power consumers who have the least chance of reaping benefits from a deregulated market are residents of sparsely populated rural areas, which are the most expensive to serve.
 

¹ “Legislators voting on electricity plan got utility PAC money,” Houston Chronicle, May 1, 1997.
² See “17 Kingmakers Shape Texas Politics,” Lobby Watch, March 4, 1998.

Lobby Watch | home