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Electricity industry resists legislation limiting fees

By: Ryan Holeywell |

Electric companies are lining up against legislation that would restrict some fees they levy on their customers, arguing the charges are critical to ensuring they recover their costs.

During a late-night hearing Wednesday in Austin, the companies argued that “minimum use fees” — charged to those who use too little electricity each month — are fundamental to the economics of some power plans.

Earlier this month, state Rep. Sylvester Turner, D-Houston, introduced a bill that would prohibit electric providers from charging those fees, which he said penalize customers for trying to conserve energy and keep their bills low.

Turner argued that the fees undermine the state’s goals of encouraging conservation, and disproportionately affect low-income and elderly customers living in small residences.

“If we say we’re a Legislature committed to energy efficiency, our methods need to align with our goals,” Turner told his colleagues on the House State Affairs Committee. “We cannot punish people for meeting the standards we set forward.”

Turner said he introduced his legislation as a result of a Houston Chronicle investigation published in January that found more than 70 percent of electric plans offered in the Houston area contain terms that may penalize customers who don’t reach a minimum level of power consumption.

The plans assess fees on customers whose power use falls below a particular threshold — typically around 1,000 kilowatt-hours per month — or offer credits for using more than a specified amount.

The fees don’t violate rules set by the state’s Public Utility Commission.

Turner and other critics say, though, that the low-use penalties discourage conservation at a time when environmental advocates and governments are encouraging consumers to find ways of saving energy.

But Turner is likely to face headwinds as he works to pass the legislation. Officials from the electricity industry at the hearing Wednesday night all testified against the bill.

The fees are necessary in some cases for retailers to cover fixed costs associated with all customers, regardless of how much electricity they consume, testified Catherine Webking, general counsel and executive director of the Texas Energy Association for Marketers, a group of retail electric providers.

She said the fees are disclosed clearly in plans and that Turner’s legislation would reduce customer options.

“There are products in the market that don’t have this type of provision,” added Stephen Davis, an attorney for the Alliance for Retail Markets, another group of electric providers. The Association of Electric Companies of Texas also presented testimony against the legislation.

But Turner and consumer advocates supporting his measure argued that while savvy customers might be able to figure out which plans have the fees and which don’t, it’s harder for the elderly and others unfamiliar with plans to parse the fine print and figure out if using less power will wind up costing them more money.

“A lot of folks are out there, who are doing their level best to save energy and save some money on their electric bill, and find out at the end of the month they’re paying more than they expected,” said Jake Dyer, a policy analyst at the Texas Coalition for Affordable Power.

Turner said he doesn’t buy the industry’s argument that the fees sometimes are necessary to recoup costs. He said he’s heard from many people across the state who oppose the fees, and he implored his colleagues to consider consumers.

“Quite frankly, I don’t think any of us would leave the Capitol and talk at a town hall meeting saying we support minimum use fees,” Turner said. “I can only imagine the response we’d get from constituents if we did.”