In 1999 the Legislature unknowingly created a set of second-class Texans when it imposed Customer Choice (choose your own electric provider) on investor-owned electric utilities, but not electric cooperatives. The legislature may have assumed that members of a tax-exempt, non-profit electric cooperative would not benefit from Customer Choice since cooperatives are not for profit, have access to cheap capital, and are member-owned. It’s 2012 and nothing could be further from the truth.
For example, take a look at Pedernales Electric Cooperative, the nation’s, and the state’s, largest cooperative. Except for a couple of green-energy plays, PEC's monopoly rates are the highest in Texas, perhaps the nation, whereas competitive rates in the deregulated market are much, much lower.
Today, the average residential member pays PEC a whopping 12 cents per kWh. In the deregulated market, 6, 7, 8, 9 and 10 cent rates are commonplace.
Today, for a majority of a cooperative’s membership the only way they can lower their electric bill is to sell their home, farm, ranch or business and move out of the cooperative’s monopoly serving territory. That’s an extraordinary measure and most members cannot do it.
And guess what? Even though cooperatives can opt into Customer Choice at any time under current law, only one has and it appears quite obvious that the others will not. The sole business purpose of an electric cooperative is to provide safe, reliable and low-cost electricity, but it’s not happening. Customer Choice is the solution.
In 2013, the Texas Legislature will have an opportunity to fix the 1990 legislation and give the captive members of Texas’ electric cooperatives the same benefit that a majority of Texans already enjoy: lower electric rates brought through competition – Customer Choice.
Randy Klaus, CPA
PEC Member Since 1990