January 07, 2007

Deregulation going full bore

Dig Deeper Texas has a great post up about electric utility deregulation in Texas, primarily what a disaster it's been. Yeah, we already knew about that. What's new is that TXU and Reliant are moaning and whining because they just can't compete with the Austin and SA muni's. From the Star Telegram

What chafes the North Texans are the lower rates in Austin and San Antonio, whose municipal systems were exempted from the 1999 deregulation law. Austin and San Antonio have emerged as direct competitors to Dallas-Fort Worth in industrial relocations, a point driven home three years ago when Toyota selected San Antonio for a big new car plant.

As North Texans have paid 13 to 15 cents per kilowatt-hour for electricity this year, San Antonio’s average rate was 9.5 cents and Austin’s was slightly above 10 cents.

Both systems, being government-owned, don’t have to pay taxes and can sell tax-exempt debt. Municipal systems and rural co-operatives have always enjoyed a price advantage because of their tax-exempt status. But the coalition complained in its report that recent increases in North Texas by TXU and its competitors have widened the disparity.

Fucking losers. The last I heard, neither were selling power in TXU or Reliant's territory. Of course, that doesn't stop them from dreaming of entering the SA and Austin markets. Part of deregulation was that private enterprises, even without access to tax-exempt financing and no taxes, were supposed to bring down prices and be better for consumers. That hasn't proven true. Which makes the case for companies like TXU and Reliant pretty damn weak.

I'm a capitalist. I hate excuses, especially from companies that hold public capital while spending huge sums on lobbying. That's the dirty little secret about all this... TXU got it's financing from the equity markets which Austin and SA muni's can't access. Of course, they don't worry so much about that. They just go on, day after day, providing the cheapest electricity in the state.

If I was holding TXU stock, I'd serioulsy consider suing management for gross incompetence. If you can't compete against a municipal power system, with all the benefits of much great scale, then you don't deserve to lead a company.

Posted by mcblogger at January 7, 2007 12:06 PM

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