AE's monopoly on the market questioned

AUSTIN (KXAN) - In the wake of the first rate hike at Austin Energy in 17 years, a key state lawmaker says he may file a bill next year to deregulate the Austin market if he believes consumers would benefit from it.

State Sen. Craig Estes , a Wichita Falls Republican who serves on the Senate Business and Commerce Committee, filed a similar bill in the last legislative session. But the measure never made it out of committee.

"I think there is a large degree of concern over electric rates and where they're going and over somewhat of a monopoly- it's not even somewhat- it's a monopoly," said Estes, about Austin Energy, before adding that it was too early to decide whether a bill should be filed or not.

"Can you imagine a situation where you would again file this bill?," KXAN asked Estes.

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"Sure, if that's what people want me to do," said Austin, pointing out the state office buildings in the capital city get their power from Austin Energy. "I pay an electric bill in Austin. I think everyone is concerned about electric rates and about the future of how we supply electricity all over the state."

Across Texas, a handful of areas have deregulated energy, including Corpus Christi, Houston, Dallas and Round Rock. Energy customers in Round Rock can choose from a variety of providers where rates vary from 5.5 cents per kilowatt hour to 11.9 cents.

By comparison, Austin Energy rates are on a tiered structure based on how much energy the customer uses. The rates range from 1.8 cents per kilowatt hour to 9.6 cents.

The Austin Energy rate increase took effect Oct. 1 and will mean the average AE customer's bill will go up about 7 percent. But Estes' zeal for deregulating the Austin market is not endorsed by everyone.

"I think deregulating Austin Energy is a terrible idea," said Carol Biedrzycki, executive director of the Texas Ratepayers Organization to Save Energy. "It's a terrible idea because I don't know of any evidence here in the state of Texas, in other states, or in any other part of the world that would show for certain that residential rate payers benefit from deregulation of electricity."

Biedrzycki believes too many choices confuse consumers. In Houston, there are close to 50 providers offering more than 200 different rate plans.

"From a consumer perspective, deregulation can really be a pain and it's a pain because you have to shop for an electricity provider every time your contract expires," said Biedrzycki.

But tell that to Mark Farrar, who lives outside the city limits, in Steiner Ranch, and still pays Austin Energy rates.

"If you live in Austin, at least you can feel like, hey, this is paying for my fire, my roads and my police. Out here in the suburbs we're already paying for those things in another tax. So it's a hidden, double tax for us," said Farrar, pointing out that part of the revenue from Austin Energy goes in to the city's general fund.

Farrar is one of nearly 55,000 Austin Energy households outside the Austin city limits still subjected to the rate hike, even though they do not have representation on the Austin City Council. The group has appealed their situation to the Public Utility Commission , who can decide to allow competition or not in their case. That decision is expected in May.

"We're waiting to see what PUC does -- if PUC takes care of it -- then there won't be a need for me to do anything," said state Rep. Paul Workman,  a Republican who represents many of the Travis County residents who are customers of Austin Energy. "If PUC does not do that, then I will continue to research and make a decision later on whether or not I am going to file legislation to put the out-of-city rate payers in the deregulated market."

Estes said he is concerned about electric rates and the rising cost of energy to customers.

"I think it's time for the citizens and the businesspeople of Austin to let their elected representatives know how they feel about it," said Estes.