Texas PUC, like TRCC it seems, protects industry more than public

Cutoffs, complaints abound with Texas' prepaid electric providers

By STEVE McGONIGLE (smcgonigle@dallasnews.com) and ED TIMMS (etimms@dallasnews.com), The Dallas Morning News, 10/05/2009
( http://www.dallasnews.com/sharedcontent/dws/dn/latestnews/stories/100409dnprofreedompowermain.3e8e2dd.html?so=TimeStampAscending#slcgm_comments_anchor )

Part 1 of 2 – The fear of losing her electricity haunted Charisse Bailey. With a failing heart, she needed power for her oxygen machine. Jobless and on welfare, she scrambled to pay an escalating bill.

"She was laying there worrying about whether she was going to be in the dark," said her aunt, Ruby Mosley.

Electricity in her Houston apartment was cut off twice in summer-like temperatures in 2007 before Bailey died of cardiac arrest at age 34.

Bailey was a customer of Freedom Power, a Dallas company that routinely draws the highest rate of consumer complaints of any electricity provider in Texas.

Freedom is a "prepaid" electric company, a type of subprime provider that emerged after Texas deregulated the retail power market in 2002. Unique to Texas, the prepaid companies charge customers in advance based on estimated usage.

State officials tout vigilant consumer protection, especially for the needy, as fundamental to the deregulated electricity market. But as the Bailey case showed, the safety net has holes.

Prepaids market themselves to people who, like Bailey, lack credit or money for deposits – often the poor, sick and disabled. Prepaid electric rates sometimes are 50 percent higher than those of traditional providers. Quick cutoffs are a constant threat.

As a result, sick people have gone without air conditioning during sizzling summer days. Families with children have been forced to abandon their homes. The elderly have had to forgo buying necessary medicine.

Those who have run prepaid companies include inexperienced operators, convicted criminals and undercapitalized entrepreneurs who have failed and left consumers scrambling to keep power. Texas utility commissioners, intent on spurring competition, have licensed prepaid electric companies even though consumer protection rules do not address their unconventional business model.

HOT: From what we can tell, obtaining a PUC “license” requires no criminal background check, exam to prove competency, or reporting to prove financial soundness. This sounds like registering homebuilders with the TRCC, and it makes a mockery out of the word licensing the concept of regulatory oversight.

The Public Utility Commission has not involuntarily revoked a single operating company's license despite rising consumer complaints against all types of electricity providers. It has withdrawn staff recommendations for stiff penalties in favor of negotiated settlements.

HOT: Likewise, the TRCC was infamous for its lack of enforcement authority.

The PUC refuses to disclose how many customers each electric company has and says it does not know how many prepaids are operating in Texas because it does not classify companies by business model. Unofficial estimates put the number of prepaid customers at up to 100,000.

HOT: After a Texas Comptroller study of new home buyers criticized the TRCC as a “builder-protection” agency and cited numerous consumer complaints, Texas builders got a law passed to block future access to records of new homes, even through an Open Records request. It sounds like the PUC is taking the same stand.

PUC Chairman Barry Smitherman said he was not aware of widespread problems with prepaid providers.

"The prepay space, in general, is a very, very small slice of the total market," he said.

The PUC director of consumer protection, however, said that he had often raised concerns that prepaid customers were being exploited but that his warnings were largely ignored.

"The trouble is these people are desperate," Mike Renfro said. "You and I would walk away from that deal, but they can't. They have no other place to go."

Letting market decide

When Texas threw open the doors to competition in one of the nation's largest electricity markets, state officials did not know for sure what type of provider would emerge. They generally left it to the market to decide. Regulators set minimal qualifications for licensing, and scrutiny of applicants was modest.

Prepaid companies have operated for more than a decade overseas and in a few U.S. jurisdictions. Elsewhere, magnetic cards are used to run a prepurchased amount of power through meters. But in Texas, prepaid customers are given an estimated charge after telling the provider the size of their dwelling and how long they want service. Typically, a cash payment is wired from a payday-lending outlet.

Many Freedom customers complained they were told after paying the estimate that additional funds were required because of "historic usage." They also claimed they were not reimbursed when estimates exceeded usage.

Randy Chapman, executive director of the Texas Legal Services Center in Austin, said a prepaid customer can be snared in a cycle of rising charges with few options.

"For a life-essential product," he said, "I don't think there should be traps."

Billing customers based on estimated usage is a formula for exploitation, said Mosley, a community activist in Houston. "It's fattening frogs for snakes," she said.

Prepaid operators say they supply power to people who might not be able to obtain it otherwise. Higher rates reflect the risk to the company that customers will use more electricity than they paid for, they say.

Though prepaid companies now target Texas' poorest residents, similar products could be offered to millions of consumers within a few years. Utility commissioners have repeatedly voiced support for the more conventional, metered version of prepaid electricity.

High-tech "smart" meters now being installed statewide will afford large retailers the option to offer almost anyone a prepaid service.

Consumer advocates fear that a leap in prepaid services will lead to a two-tiered system of electricity delivery defined by a customer's credit and payment history.

Carol Biedrzycki, executive director of Texas Ratepayers' Organization to Save Energy, said all consumers should be concerned about prepaid service.

"Once you degrade the quality of service or a customer protection standard for one class of customers," she said, "then you are opening the door to making everybody else accept that lower standard, too."

Companies go bust

In 2008, five prepaid companies collapsed after a sharp spike in wholesale electricity prices. More than 42,000 customers had to scramble to find other companies to keep their power flowing.

HOT: This is why it’s important to verify competency and financial stability before granting a license.

Some people paid for electricity they never received. Ricky Moore of Haltom City said he lost $300 in spoiled groceries and was forced to vacate his home after his power provider, Pre-Buy Electric, went bust. Moore, 48, is a paraplegic who survives on disability payments.

"I don't sweat but over half my body, and I have to have air conditioning," he said. "They cut me off in 100-degree weather. It was bad, man. It really was."

Moore was switched to TXU Energy, which soon had him cut off. Tom Stewart, a spokesman for TXU, said Moore was disconnected for not paying a $300 deposit.

Had TXU known of Moore's disability, Stewart said, he might not have lost power.

"It was an unfortunate sequence of events," Stewart said.

The Dallas Morning News found that two of the five electricity providers that collapsed were run by people with criminal convictions; two others had prior bankruptcies. Some used fronts to obtain licenses, and some didn't bother to notify the PUC they had bought the company. The PUC let them operate for years without checking out their owners.

Other agencies stepped in: The U.S. Securities and Exchange Commission filed a lawsuit in March 2008 charging the owners of National Power Co. with buying their controlling interest with proceeds from a fraudulent investment scheme.

In June, the Texas attorney general accused owners of two defunct prepaid companies, Pre-Buy Electric and Etricity, of collecting $2 million while their businesses were folding and transferring customer funds to themselves or shell entities.

The PUC's enforcement division didn't file a notice of rules violation against Etricity until a week after the attorney general sued the company. The agency seeks $1.44 million in fines from a company that no longer operates. The PUC stripped four of the defunct companies of their licenses – but only after they went out of business. The fifth failed company, Blu Power, remains licensed.

HOT: Why does the attorney general have to get involved first and only then prompt action from the PUC? This is like when the TRCC stepped in to take credit for shutting down Pete Stucky, a Williamson County builder who agreed to a lifetime ban from building again after the district attorney stepped in to address consumer complaints.

In April, utility commissioners modified licensing rules by enhancing capital and managerial requirements. Now, the PUC chairman said, license applications will be scrutinized more closely.

"I think the public has an expectation that the people who are running these companies know what they're doing," Smitherman said.

'Flagrant' disregard

Freedom Power was born in March 2004, two years after deregulation.

Ken Weaver, a Dallas entrepreneur who also owned a prepaid phone-services company, purchased Freedom and its operating license in 2006. Weaver had an extensive criminal record dating to the 1970s. His rap sheet included a felony conviction for stealing a small plane and running a car-theft operation that spanned two states. He operated Freedom Power for more than three years without filing the required licensing documents to reflect his control of the company, records show.

In July, two weeks after The News questioned him about his criminal record, Weaver informed the PUC that he had sold his interests in Freedom to a trust controlled by his former wife.

Freedom – which Weaver described as having fewer than 10,000 customers – has had repeated skirmishes with the PUC during its short life.

In November 2006, the PUC legal staff filed a petition to revoke Freedom's license. The company had compiled 379 violations of commission rules, the staff said. The alleged violations stemmed from a PUC moratorium on cutoffs during a summer heat emergency. The staff petition accused Freedom of "flagrant, pervasive and willful disregard" of commission rules.

Freedom sued to block enforcement of the moratorium. The company contended it could not survive without the ability to do timely cutoffs. Attorney Chris Malish argued in a losing effort that "air conditioning is not an inalienable right."

PUC's legal staff withdrew the revocation petition in September 2007. The agency subsequently fined Freedom $21,050 for other violations.

HOT: Too often offending companies view such fines a simply a cost of doing business. They do NOT deter bad behavior. Revoking a license or criminal prosecution would.

Thomas Hunter, director of the legal division, declined to be interviewed, as did members of his staff involved in the Freedom case.

Agency spokesman Terry Hadley said the legal staff concluded there were not enough rule violations to warrant revocation. Freedom also responded to complaints in a timely manner, he said. [HOT: 379 violations for such a small electric utility is not enough?]

Since Weaver took control of Freedom, PUC staff has found rule violations in almost half the 516 consumer complaints filed against the company. The violation rate was more than three times the average for all other electricity providers.

Freedom amassed 276 customer complaints after the revocation petition was withdrawn, PUC records show. More than 20 percent of those complaints resulted in findings that Freedom had violated PUC rules. Weaver attributed the complaint rate to his clients' financial struggles.

"We see a lot of complaints filed right when payment is due," he said.

One of the most common complaints, PUC records show, was that Freedom cut off power without providing proper notice to the customer.

Prepaid providers like Freedom rely heavily on prompt disconnections. Every kilowatt-hour past the amount paid in advance is a cost the provider may have to absorb.

PUC rules are designed to limit disconnections. Customers must receive 10 days' notice, and no one can be cut off on days of extreme heat or cold, or on weekends and holidays.

Smitherman said prepaids, like any other provider, must abide by the disconnection rules despite any difficulties it might pose.

"If you want to be in that business," he said, "you have to understand there are going to be periods of time when you are going to be giving power away."

Spotty enforcement

Consumer advocates accuse the PUC of protecting the interests of electric companies, including prepaids, over the rights of those who struggle to pay their bills.

HOT: Here’s another Texas example (like the TRCC) where a state agency public the interests of industry and NOT the public. It’s what happens when special-interest industry lobbyists are allowed to write the rules that govern their own industry. The foxes should not be allowed into the hen house or commissioned to design it.

"In Texas, we believe in the religion of competition as opposed to the religion of compassion," said Tom Smith, director of Public Citizen of Texas.

The PUC's consumer protection division has no authority to bring enforcement actions.

HOT: That’s just like the TRCC and other state agencies put in place by the industries they ostensibly regulate.

Its staff is smaller than it was in 2002. Yet consumer complaints against all electric companies more than doubled from 2005 to 2008, according to PUC records. Customer disconnections rose nearly 30 percent during that period, records show. Consumers filed 54,356 complaints against electric providers from July 2002 to May 2009. PUC staff found rule violations in 11 percent of those and made only 34 attempts to seek sanctions.

Most actions arise from technical violations such as breaking a filing deadline. Penalties are typically the product of negotiations between agency lawyers and power companies. Outside parties, including consumers, are not given a chance to participate. 

Biedrzycki, the consumer advocate, said the deterrent effect is negligible.

"If enforcement is doing its job, these companies would be very reluctant to step out of line," she said. Instead, "they hire some people to go over and glad-hand all the PUC staff, and they make a settlement."

Smitherman contended that the PUC's enforcement is tough and about to be tougher with reforms that took effect in September.

"If they lie to you or cheat you, then we are going to come after you," he said.

State Rep. Sylvester Turner, D-Houston, remains unconvinced. Turner, a member of the committee that oversaw creation of the deregulation bill, said he supported the measure because he was assured consumer rights would be protected. But he said the record of the past seven years has him feeling betrayed.

"We deregulated the marketplace on a commodity that is essential," he said.

It was Turner who asked the PUC to investigate the struggles of Bailey, the infirm Houston woman whose electricity was disconnected twice.

Freedom Power told the PUC that it had worked with Bailey to arrange a payment schedule but that she had failed to abide by it. Her power was on when she was rushed to the hospital in August 2007, Freedom said.

The Houston Fire Department, which normally transports emergency patients to hospitals, declined to release its records on Bailey, citing privacy, and appealed an open-records request by The News to the attorney general.

Bailey died in September 2007 after spending her last weeks in a rehabilitation center. She was buried at county expense in an unmarked pauper's grave.

Officially, her death was attributed to natural causes.

Owner of Dallas electricity firm hid past

By STEVE McGONIGLE (smcgonigle@dallasnews.com) and ED TIMMS (etimms@dallasnews.com), The Dallas Morning News, 10/05/2009
( http://www.dallasnews.com/sharedcontent/dws/dn/latestnews/stories/100509dnproweaver.3f561d7.html?so=TimeStampAscending#slcgm_comments_anchor )

Part 2 of 2 – Ken Weaver had a problem with his past. A decade of scheming, stealing and prison made for many inconvenient truths. So by the time Texas licensed him to provide phone and electric service, he had constructed a heroic history.

The college dropout from Duncanville became a dual-degreed university graduate and varsity football legend. The carpenter was transformed into a corporate vice president who developed resorts in Brazil.

The fake pedigree, as well as state inattention, allowed Weaver into the lucrative deregulated utilities market. He was one of a breed of entrepreneurs who saw opportunity in selling expensive electricity to people living on the economic edge.

For some, the consequences were painful.

Weaver's Freedom Power developed a track record of cutting power to customers in midsummer, despite a state-imposed moratorium on cutoffs during a heat emergency. It also compiled the highest rate of consumer complaints in Texas and one of the highest rates of rule violations of any electricity provider in the state.

The Public Utility Commission, which is supposed to protect consumers in the deregulated market, ultimately fined Weaver's company $21,050 for a few electrical cutoffs. But it took no other action even after The Dallas Morning News informed it of Weaver's criminal history and false statements his company made in filings to the commission.

Weaver failed to amend Freedom Power's existing operating license to add his name as owner after he bought it in 2006. And an earlier amendment to Weaver's prepaid phone license denied any company officer was a convicted felon.

Admission

After The News questioned Weaver this summer about his criminal record and other details of his past, he filed documents with the PUC stating that he had sold his interest in both companies to a trust run by his former wife.

Weaver later admitted to the newspaper that he had perpetuated an elaborate fantasy over the past 20 years to bury what he called the most embarrassing period of his life. He apologized and said he would try to make amends. "But to be honest," he told The News, "my real instinct right now is to go hide under a rock."

The PUC had little to say about Weaver. One current and two former commissioners said they didn't know him. Staff lawyers declined to speak on the record.

If the PUC had known about Weaver's felony convictions, that would not automatically have disqualified him from obtaining a license, the agency said, although it would have been considered. Had state regulators conducted even a cursory check into Weaver, they could have discovered a life story that raised repeated questions.

The jet-set lifestyle Weaver, 53, leads today belies his modest origins. He was raised in a blue-collar family, the middle child of a school janitor. Inspired by an uncle, Weaver began working as a carpenter while still in his teens. He barely attended college, although his résumé includes a bachelor's degree in business from the former North Texas State University and, sometimes, a second degree in construction technology and management.

Sports claims

Weaver also has boasted a three-sport athletic career at North Texas.

He told The Toledo Blade that he played on three championship baseball teams and had a 39-inch vertical leap in basketball. He said he was summoned from third-string obscurity in 1975 to quarterback the Mean Green in its opening football game, delivering a 63-0 victory and leading the team to a 5-5 season.

The head football coach at the time, Hayden Fry, told The News that he didn't recall Weaver. A spokesman for the university's athletic department said he could find no record of Weaver participating in any varsity sport at North Texas.

After initially repeating his claim of a college degree, Weaver conceded to The News that he had enrolled in only a few college courses before dropping out.

"I have told that lie to cover up my conviction and to make myself seem more educated," Weaver said in an e-mail message.

Weaver made the same degree claim in seeking licenses for his telephone business from at least four states between 2000 and 2002, records show. Two states that sent him to prison – Texas and Georgia – licensed his phone company.

'All kind of talk'

Weaver's boyish good looks and casual demeanor are disarming.

"He seems to play the Texas drawl, to play the good ol' boy thing to the hilt," said Toledo Blade sports reporter Matt Markey, who met Weaver while he was driving in a minor league stock car circuit. Weaver is an "always smiling, always joking, backslapping kind of guy," Markey said.

Other acquaintances describe Weaver as a beguiling raconteur who can captivate a room with colorful stories, attractive female companions and large wads of cash.

Don McKinley remembers Weaver's gift for gab. The two met in November 1986 while McKinley ran a small airfield near Pearsall, southwest of San Antonio.

"He had all kind of talk," McKinley said.

Identifying himself as a Dallas cabinet shop owner, Weaver rented hangar space from McKinley to store a single-engine Cessna he had piloted to South Texas.

The plane turned out to be stolen from Love Field, and Weaver was arrested before he could fly out, according to police reports.

Maps of Mexico

In a search of the plane and Weaver's pickup, deputies found almost $10,000 in U.S. currency, another $400 in Mexican pesos and a set of scales, along with marked maps of ranch airstrips around Torreon, Mexico, and a .30-30 rifle.

Weaver told deputies he had gone to Torreon to recruit workers for his cabinet business but refused to discuss the plane, according to police reports. "You don't know, these people will kill my wife and kids," he told Frio County Chief Deputy Sheriff Clayton Schelcher.

Robert Bedell, the plane's owner, told The News that Weaver identified himself as a potential buyer named John Jackson. He said he had shown him the plane a few days before it was taken.

Bedell said law officers suspected Weaver planned to fly to Mexico to buy drugs. Weaver's wife begged him not to press charges, Bedell said, saying her husband was trying to raise money to save his foundering business.

Customs agents ultimately seized the money and Weaver's truck, records show. But Weaver was charged only with unauthorized use of a motor vehicle. Even though he was on probation for an earlier theft of a construction tractor in Dallas County, Weaver was granted bond. He posted it and vanished, leaving behind his wife and two daughters.

Stolen cars

He resurfaced in July 1987 when police in Smyrna, Ga., a suburb of Atlanta, arrested him for possessing stolen cars and falsifying their identification numbers.

A former neighbor in Smyrna, Dan Strousberg, said Weaver identified himself as Steve Landers, a wealthy Texas oilman. (Landers is the name of a Weaver brother-in-law.)

Weaver lived alone and said he was going through a divorce, prompting sympathetic women to cook him dinners, Strousberg said. "He was good at conning people."

Investigators later determined that Weaver had been stealing cars from Georgia and Texas, transferring ID numbers from vehicles bought at salvage and reselling the cars. Weaver pleaded guilty to theft and fraud-related charges and was sentenced to three years in prison. He served less than a year before being returned to Texas to face prosecution in the airplane theft case.

Again admitting guilt, Weaver received two years in prison from a Dallas County judge and six years from a judge in Frio County. Because of time served, he spent just three months in prison before being paroled in August 1989.

Weaver was 33 and single. His business was dead, and he had no home. From the day he regained his freedom, he told The News, he vowed to hide his past.

New beginnings

He remarried and started a second family. He revived his construction business and began dabbling in real estate investments. Then he met a man who convinced him that there was good money in selling phone services to people of modest means.

Soon after local telephone service was deregulated, Weaver launched AccuTel in 1996. His business model was selling service on a prepaid basis.

In filings to the PUC, he listed a phony college degree and a work history that included a stint as a construction executive who oversaw the development of several resort properties in South America.

The employer he referenced was Specialty Restaurants Corp., a nationwide business founded by Dallas native David Tallichet.

John Tallichet, the founder's son and successor as company chairman, told The News that SRC never built resorts in South America. He said Weaver may have worked for SRC's construction division, but he was never an executive.

Weaver later admitted he "overstated" his work for SRC to conceal his felony record. "It's a stigma and a label that greatly limits a person from achieving success," he wrote in response to a question from The News.

The PUC approved Weaver's license application for AccuTel in three months.

After entering the phone business, Weaver's fortunes seemed to soar.

In 1999, he bought an office building on John Carpenter Freeway worth nearly $1 million. Two years later, he purchased an 11,000-square-foot home near Preston Hollow. In 2003, he bought a penthouse condo on Turtle Creek, a fleet of 19 pickups and joined the NASCAR Craftsman Truck series.

Weaver also began racing on the ARCA stock car circuit, a feeder league for aspiring NASCAR drivers. At 47, he joked of being the "old fogey."

While he never won a race, he had two second place finishes and ranked third in championship points in 2005. He was runner-up for ARCA's rookie of the year.

Weaver dropped off the circuit soon thereafter. He said it was frustration, but an ARCA spokesman said Weaver had clashed with his sponsor.

Freedom Power

In February 2006, Weaver purchased Freedom Power, which had been licensed by the PUC two years earlier. He didn't know the electricity business, he said, but still felt qualified. "We thought we understood the consumer very well, and the needs of the consumer," he said.

Weaver insisted he cared about his customers and worked personally to keep their power flowing. During a two-hour interview in late June, Weaver produced a printout of what he said were daily payments he accepted from one customer.

"It's devastating when the lights go out," he said. "It changes your life."

Although thousands of his electricity customers had failed to pay their bills, Weaver said, he chose not to pursue collection.

Customer complaints to the PUC were often the result of people in desperate financial straits trying to maintain electrical service by any means, he said.

"When we look at the nature of the complaint," Weaver said, "usually it's that we couldn't extend [payment]. We have all kinds of payment options, but some kind of payment has to be made for the service to be rendered."

His sole aim, Weaver said, was to earn enough to keep the business going. "There's nothing about this that we intended it to be a charity."

Weaver acknowledged in the June interview that he knew about the PUC's rules regarding felons operating electricity companies, but he gave no indication that he intended to sell Freedom.

Sale announced

In July and August, however, Weaver notified the PUC that he had sold his ownership in the electric and phone companies to an irrevocable trust controlled solely by Peni Barfield. He did not identify Barfield, an officer of both companies, as his former wife. Weaver refused to provide documentation of the sale. Financial records he filed with the PUC are not publicly available.

HOT: Access to the records are blocked, just as access to the TRCC’s records of new and remodeled homes was blocked.

Around the same time Weaver settled two lawsuits with a former fiancée whom he accused of failing to return a $54,000 engagement ring and thousands of dollars in personal loans. Chivas Warren, a former cocktail waitress who lived with Weaver for six years, had threatened to expose Weaver's criminal past, according to Lisa LeMaster, a media relations consultant Weaver hired after his interview with The News. Settlement terms were not disclosed, and the parties declined comment.

In a letter to The News in early August, Weaver said he was ashamed of his misrepresentations but added:

"You and I both know," he said, "that a convicted felon is not going to get a license, a job or for the most part a second chance."

READER COMMENTS (representative sample):

Posted by JohnnyFive5
Deregulation was great. My bills doubled and Oncor service now sucks. Good job Texas legislators! Next on the list: Toll Roads. Now you want us to pay for roads we already paid for. Where is Governor Rick Perry? Buying property where the toll roads are going to be built, I’m sure.

Posted by ShutYourPieHole
Our legislature couldn't give a tinkers darn about Texans, regardless of race, creed, color or our economics.

Posted by r5069
We voted for these guys and all they do is get with their electric buddies and cheat the people. I say kick them out of the state of Texas and if that lady died of no electricity then the utility commission should stand trial for manslaughter. That’s for not doing their jobs. It’s so ridiculous in this state that scammers and payoffs are a way of life in Texas politics. I don’t think professional people should be allowed to be on any decision board. Even the governor was a disgrace to the people of Texas.

Posted by HornsFan96
          HOT: This is such a typical argument of the “Just let market forces work” crowd.
  Competition and free markets are a wonderful thing. But they require the consumer to actually do their homework. If you do a little research (easily available, thanks to a government-sponsored web site and information booklet) on electricity providers, you can quickly find the lowest-cost option in your area. Right now, I have locked in the lowest rate that I've had in more than 10 years.
      If you don't bother to do your homework, you might get screwed. Less-educated consumers must make the effort to learn about their provider by asking for help. There is an 800 number manned by the state to give assistance. Plus, there are tons of charitable institutions such as churches, the Salvation Army, etc., where you can find help to figure out your best option.
      A few people make poor decisions and don't try to find the help they need. Then, they try and ruin deregulation for the rest of us - most of whom have benefited greatly. We all must take personal responsibility. For the very poor, old and infirm, taking responsibility means asking for help to make good choices. For the rest of us, it means doing your homework.

Posted by RSanti
"They generally left it to the market to decide" The market was manipulated by unscrupulous retards using HOCKEY STICK energy prices.

Posted by Veryn
HornsFan, you are the only person I've ever heard who's actually a fan of deregulation of our electric service. Except for a few congressmen, and power company execs, that is. So, I've gotta know, who is your electric company? Just how much do you pay per KwH? By the way, a while back I did my research, and tried to switch to a cheaper (and well-known) service. The clueless person answering the phone kept repeating dumbfounded, "But...you already have electric service." "Yes," I would reply, "but I am interested in switching to your company, instead, since it offers a cheaper rate." "But… you already have electric service." After this back and forth for a while, I figured saving less than a cent per kwh wasn't worth dealing with these people. What would they do when the lights went out? Tell me that I'm sitting in the dark?

Posted by doubledown
I predict that by the next legislative session Mr. Smitherman will have left his PUC Commissioner position and will be a lobbyist for the Texas power companies.

Posted by KilgoreGirl
According to "news sources," Texas has the highest electricity rates in the good 'ole US of A. We have higher rates then California. According to my electrical providing expert (the hubby) the high rates are pure and simple greed. According the congressman who wrote and sponsored deregulation, this was NOT supposed to happen; it was designed to make the rates lower.....guess he forgot his math classes in elementary school.

Posted by johngp
Caveat Emptor -- A Latin term that means "Let the Buyer Beware" Deregulation of anything has always turned into a disaster. Remember the Telephone Companies Bell Telephone Company & its subsidiaries (Ma Bell) Deregulation. If anyone has noticed lately, that "Deregulation" has gone full circle, and we now have for all practical purposes ONE (1) Telephone Company. All of the others buy line time/service and or Air(Cell)time/services AT&T. Plain & Simple, "Deregulation Doesn't Work"

Posted by xLarry
Electric, gas, and water should be regulated and be a monopoly in an area. The massive investment in structure can't be duplicated - one power line, one gas line, and one water line.

Posted by Gimpy
"'In Texas, we believe in the religion of competition as opposed to the religion of compassion,' said Tom Smith, director of Public Citizen of Texas." That "religion" is called "capitalism" and while not perfect it's far more compassionate than the alternative. Unless, of course, you consider the routine "bread lines" of the former Soviet Union, the chronic and widespread poverty in Cuba, or the starvation in North Korea to be "compassionate".

Posted by Tonyc
In the land of freedom,it is always easy to say let the market find its own level. Let business run without regulation. The belief that business will always look out for its employers and customers is a joke. Business is in the business of making money, and without regulations they just let their greed take over. Show me one TIME where business without regulation has done a better job for ALL of the people. Time and time again we hear how if we deregulate it will make business more competitive. That has proven to be BS, what it does is allow those businesses to make larger profits and just not worry about the people they serve.

Posted by Hyde
Pay your bill. Did someone promise free electricity?

Posted by JSol
Free market at its finest!

Posted by BananaHeads
     Ever since they put in my new and improved digital meter, my bills have skyrocketed. I've read that this new criminal rip-off has negatively affected people around the country. They 'say' it's running right. Sure it is - calibrated to run fast is what they're doing. I wonder how many billions of dollars in stolen money these parasites will profit every year. They belong in jail.

     About deregulation, since the Kingdom of Texas deregulated Colleges, look how rates have quadrupled. No one can afford to go to college anymore. This country is just one giant greed fest; left to its own devices they will raise fees until the people implode. As for me, I no longer drive on the NTTA greed roads since they raised fees. I buy my cigarettes from the Ukraine for $15 a carton ever since the state started stealing a $10 tax per carton. I only fly with earned mileage from my credit card. I don't check in luggage and I get rides to the airport. The list goes on. We have choices and don't have to cave in to these greedy criminals.

Posted by BananaHeads
This is not as simple as 'pay your bills or too bad.' This is about charging enormous rates for enormous profits that are out of line with fair business practices. Electric companies, colleges and airlines are simply doing what oil companies have been doing for years. Every wholesale company is within a few cents, resulting in every gas station being within a few cents of each other. This is not competition; it's a group monopoly where each company cooperates under the table. It's illegal and the FTC, just like every other segment of govt. in this country, does nothing. As for the welfare people, they likely couldn't afford basic necessities no matter how low they are priced. Are they entitled? Heck no. But they are entitled to fair rates just like the rest of us.

Posted by SD
Electricity deregulation is the biggest fraud ever perpetrated on the citizens of Texas. ERCOT stole millions of dollars with their crooked management and the PUC is a joke at protecting consumer interests. Every legislator who voted for deregulation should be voted out of office and run out of town on a rail.

Posted by Man in the Middle
Free enterprise is a great way to take advantage of the poor, the sick, the weak and the uneducated. Texas is a state dedicated to this process. We have the highest utility rates, the highest home insurance costs, etc. Wait until the free market for water is opened up. You can die of thirst in as little as three days, so there won't even be time to complain about the rates. To paraphrase a noted economist, you can't have real free enterprise if you are squeamish about the bodies. So much for compassion.

Posted by althusius00
These problems are not confined to the PUC. The Austin American-Statesman reports that the State Board of Dental Examiners will not suspend the license of a dentist who commits a felony or a dentist who is a drug addict. We have state agencies that do nothing to protect consumers. This is the legacy of Gov Rick Perry.

Posted by bigj
The legislature sold us deregulated retail electric markets as a way to bring lower electric rates through competition. But somewhere along the way theory didn't translate to reality. In the deregulated areas of Texas we pay the highest average electric rates in the nation. Say what you want, but it's obvious we have a failed experiment since NOBODY else in the country has followed our lead. And the regulated retail markets left in the state (e.g., San Antonio) are in no hurry to join ERCOT - their average rates are significantly lower than ours. All you left and right wing nut jobs on this site need to take a break from typing and do some research. This mess we're in is a perfect example of why political dogma and untested theories should be kept out of our day-to-day lives.

Posted by LiberalMarkets
     The problems the author has addressed in this first installment are really the problems of poverty, not fundamental problems in the market for electricity. There are many private and public charities that assist people who have difficulty paying their electricity bills. The author hasn’t mentioned any charitable assistance available to those faced with having their electricity disconnected, or how many people are assisted by charities, or what programs providers other than the fringe pre-paid companies offer to their customers to help them in times of need. The author cited very few examples of where electricity providers failed to play by the established rules of the market. The author writes “Consumer advocates fear that a leap in prepaid services will lead to a two-tiered system of electricity delivery defined by a customer's credit and payment history.”
     Let’s compare the markets for food and shelter, two other necessities, to the market for electricity. Groceries are supplied to consumers on multiple “tiers,” from Whole Foods and Central Market to Kroger, Walmart, and Sack & Save. People self-select the store they want to patronize based on their preference for price, service, organic, loyalty rewards, brand selection, cleanliness, and dozens of other criteria. This self-selection allows grocery shoppers to get the best value for their grocery budget. Also note that groceries are always “pre-paid” for. It would be absurd to require grocers to bill you at the end of the month for the food you purchased during the previous billing cycle. If that’s how you want to buy groceries, you’re free to use your credit card. And private charities like food banks and government-supported programs like WIC and federal food stamps help prevent the poor from going without necessary food. Likewise, housing and shelter is provided on multiple tiers and almost always requires pre-payment and a large deposit. There are several charities, private and public, that assist the poor with finding and paying for housing.
     The deregulated Texas electricity market lets Texans decide how they purchase electricity. We are no longer forced to buy from a one-size-fits-all monopoly supplier. There are dozens of plans that offer 100% renewable electricity, there are dozens of discount companies that offer basic, no-frills plans, and the former regulated monopolies finally have to take customer service seriously and they have to work to keep prices low. And the effect on electricity rates is deregulated companies now offer the lowest rates in Texas, lower than regulated monopolies, municipal co-ops, or any other form of provider (see the September 26, 2009 Ft Worth Star Telegram). Unless, of course, you want renewable energy, airline miles, or other add-ons. And it is ok to want more than just the basics, but the great thing about the deregulated Texas market is we, the electricity consumers, can choose which features we pay for, not a panel of bureaucrats in Austin or city hall.
     The pre-paid pricing model does not interfere with markets’ abilities to supply necessities, just look at the market for groceries and rental housing. And these necessities are supplied without major government regulation. We have seen the disasters of government interference in supplying food (China’s great leap forward) and housing (NYC rent controls). Whenever markets supply necessities, whether it’s electricity, food, or shelter, there will be some individuals who are underserved by the market. But this does not mean we need more regulation, because people were disconnected for not paying their bills when the market was regulated. Instead, we should strengthen our private charities that offer assistance to those in need.

Posted by bigj
     To LiberalMarkets - Give your long winded copy and paste job from the utility lobby talking points a rest and let's talk actual numbers. The current residential rate for San Antonio (regulated) is 6.275 cents off-peak (add 1.5 cents during June-Sept for anything over 600 KWH). Austin's (regulated) tops out at 7.82 cents/KWH for anything over 500 KWH (under 500 KWH is significantly less). Compare that to the cheapest fixed rate I see today on powertochoose.com for my zip code in the Dallas area (unregulated) at 9 cents/KWH. The highest is 14.5 cents/KWH. Do actual numbers mean anything to you?
Oh, and let's not forget that the deck is SO stacked in the favor of providers in the unregulated market. Last summer I was on a low (for ERCOT) fixed rate plan and my provider decided to just invalidate all those plans. So with no warning I was dumped to the POLR at almost 20 cents/KWH. Is that an efficient market? I call it a joke.

Posted by iraqidoc
In 2002, Texas was the 12th cheapest when it comes to electric rate. Today, we are 32rd. Deregulation worked so well.

Posted by ChinaKurt
     While I believe in free competition, I don't believe in highway robbery of customers, particularly for such an important -- for some, absolute vital -- resource such as electricity. It's pretty pathetic the PUC's complaint staff doesn't have any enforcement power. Who does? Are the penalties civil only, or are there criminal statutes that might apply, especially in cases in which a customer is demonstrably made ill or dies as a result of the electric company's actions. There should be. And there should be criminal and civil penalties if a company doesn't credit or refund any excess left over from an advance payment -- credit or refund every last penny, without any "service fees" -- after all, they're charging a substantial premium already.
     If we want to continue with pre-pay, how about working it the way they do in some other countries. For instance, some British friends have told me of gas outlets in their apartment or houses that have coin slots, and they feed in money for the amount of gas they think they need. A swipe card would work as well.
     I like the idea of pre-oay for some things. For instance, that's all I use on my mobile phone. I should say I live in a mixed-zone neighborhood, and within a hundred yards there are numerous shops that sell pre-pay telephone cards. Two are literally inside my apartment complex, and are within about 10-12 yards of my front door. Yes, I do have a regular phone line, but I use it strictly for Internet service; I haven't made a call on it in at least a year or more.
     I realize Texas is a business-friendly state, and that's fine -- until it makes the state become literally anti-consumer. There has to be balance.

Posted by JohnnyFive5
I used to think Kinky Freedman (sp?) was a joke. I used to think the Democrats were a joke. Now I realize that the only ones laughing were Rick Perry and my ex-Republican candidates. NO MORE!! I will get my mom, dad, brothers, cousins, second cousins to vote those liars out of office.. Kinky Friedman looks like a great choice now.

Posted by ObamaIsBest
Electricity deregulation has been a total failure in the state of Texas. And who do we have to thank for that? Why the Gov Perry = Murderer.

Posted by NickyDowns 
     Municipalities in Texas that elected NOT to participate with electric deregulation (and keep their original system) have much lower rates. For example in January 2007, for 1,000 KWh: City of San Antonio without competition: $ 68.32 TXU Energy: with competition: $160.24. Even if you selected one of TXU's competitors, such as Dynowatt Energy, you would have paid $132.95.
     If a city is able to provide electricity for about a third of what a competition provider does, somebody's getting ripped off. Multiply that by a customer base of 12 million customers and the profit is staggering. (Texas has approx 23.5 million people)
     How many of us have looked into this, or made some calls to find out why? Or demanded that our legislature do something about it? Why have we resigned ourselves?
     I'll admit... the Texas energy situation is complicated. The natural gas situation has complicated the market. But, Are you aware that TXU sought approval and received approval from the state to raise their prices if natural gas prices went up, since many plants use natural gas? It sounds reasonable. You would also presume that the state would mandate lower prices if natural gas goes down? Think again....they didn't.
     A comprehensive investigation found that TXU caused the natural gas market to become artificially inflated, which caused natural gas prices to skyrocket, raising their rates almost 60% in five years. When gas prices came back down, TXU didn't lower their rates. All of this was done with the blessings of our state legislature and especially our governor Perry. http://cbs11tv.com/topstories/local_story_213203559.html 
     Here's what the Dallas Morning News said, when reporting the winners and losers of a recent legislative session:
WINNERS: TXU. The company got the juice it needed from more than 80 lobbyists paid about $5 million.

Posted by Catdad
I wonder how many other good 'ol boys like this guy is still out there. Being white in Texas is all you need to succeed even if you are a felon.

Posted by TxStoney
Email or call the chairmen to tell him what you think.
     Barry T. Smitherman
     512-936-7025
     barry.smitherman@puc.state.tx.us
Also let your senator in Austin know your thoughts (http://www.senate.state.tx.us/75r/Senate/Members.htm#FYI). I find it odd that the chairman and his 2 commissioners were all three voted unanimously in on March 3.

Posted by ZebraBob
So, exactly WHY do we have any laws about full disclosure if no one ever checks up on the applicants? Makes me want to embellish my resume and get a fancy CEO job...Hell, maybe I can still get some bailout money!

Posted by GaryH
I used to know a pathological liar like this in high school. We all could easily see through him but I guess that's because we were 17 and not on a state regulatory commission. It's the same old story of a state regulatory agency asleep at the wheel, whether its home health care, charter schools, utility providers, home builders, insurance companies, the list goes on ad nauseam. I can't really blame "deregulation" because oversight would be no more effective if a particular industry were "regulated".

Posted by JPT
Examine Weaver's record of campaign contributions. This is just another example of [Rick] Perry's mismanagement at the taxpayer's expense? Weaver's ability to get away with ripping off the public smells of crony politics. How often does Gov. Perry have to botch running state government into the ground before voters finally decide to kick him out of office? The headlines over 8 years are littered with examples of Perry's -malfeasance! We need a governor who protects the public from scam artists and special interests. Do we need to wait for another Enron before we wake up?

Posted by BartReeder
Combining this story and the comments about obtaining some bailout funds, I just remembered that I personally operate a bank, car manufacturer, and investment firm that are all "too big to fail." If you are with the federal government, I don't need a wire transfer, just unmarked FOREIGN currency. Everybody knows the dollar isn't worth what it used to be ;)

Posted by kinplano
Put aside the details of this scam artists’ life, and you clearly see why Texans pay the highest electricity rates in the country. Our broken system of deregulation allows too many hands into the pot. Generators such as Energy Future (former TXU Corp) run their Lignite (coal) and Nuclear plants with massive profits. They produce electricity at a far cheaper rate than natural gas plants. But, our system allows them to charge higher rate than a natural gas plant would charge. They sell power to these Retail Electric Providers, such as Freedom and the dozens of other choices you have these days. They all want to earn a profit too. Add in the final piece, which is still regulated (wires and poles) that just received approval from the PUC to jack up their rates, and it’s clear why its costs us so much. Three separate businesses trying to earn a profit. It’s no surprise that a kilowatt hour can get as high as 19 cents, as we saw in 2008. I sure do miss the days of a regulated utility providing the entire service at the lowest overall cost to the consumer.

Posted by Shorebreak

Deregulation = higher prices and more crooks.

Posted by Santee

Sounds like very effective use of our Texas Republicans "Pay to Play" scams in Austin. Why should any Texan be surprised???

Posted by LtDanz
Why don't you expose the crooks that run the credit card & health insurance industries also?

Posted by jerryw
Free enterprise? No, we all pay. "Deregulate" means "I have a plan to screw the public but it is against the law. Change OR do not enforce the law for me." We have accommodated the greedy for so long we think it is the proper way. You don't have to directly buy an official. Give to their political party.

Posted by Carbonfriend
Corruption involved with the electricity deregulation....ya think? The entire deregulation was a total scam. Now we're paying the highest rates in the country. Just wait until the special interest rich "cap and trade" passes. All we can do is open our wallets to these crooks!!

Posted by NoCritic

WOW... the chutzpah of some people. It’s one thing to deny your past when asked, entirely different to entirely fabricate a new one... this isn't simply padding a resume. There is decency in someone like this, and I would be concerned to be in any kind of a relationship with Weaver, business, personal, or otherwise.

Posted by Sanders Kaufman
So THIS is why Republicans like deregulation so much - because it keeps the American people from stopping predators.

Posted by Ignatius
Heckuva Job, PUC! Heckuva job, Perry! Once again, the GOP mantra of "less (competent) government" proves its merit.