DATELINE: 29 July 2009
TXU to trim prices; Rates still among highest in market
By ELIZABETH SOUDER
The Dallas Morning News
TXU Energy, a unit of Energy Future Holdings, announced some price cuts on Wednesday, but will still charge some of the highest rates in the market.
The lower prices come at a time when the cost of natural gas, a key power fuel, remains at some of the lowest levels in seven years. And, the price cuts come a few weeks after a heated public debate about consumer protection between a key lawmaker and Public Utility Commissioners.
TXU is reducing the price of some plans by as much as 15 percent. The company won’t change the price for people who have never switched plans, who remain on the old price to beat. That price actually rises a touch, to 12.8 cents per kilowatt hour from 12.6 cents for people who use 1,000 kilowatt hours a month. The rise is due to a regulatory charge for new electricity meters.
Other pricing plans will become cheaper. For example, the Texas Choice 12 pricing plan, which offers a fixed rate for 12 months, costs 12.4 cents per kilowatt hour, down from 13 cents, according to the PUC’s Power to Choose website.
Despite the reductions, TXU’s prices remain higher than others in the market. Champion Energy Services offers a 12-month fixed rate of 9.8 cents per kilowatt hour, according to the PUC site.
TXU said it will allow existing customers on the more expensive contracts to switch to the cheaper plans without penalties for breaking their contracts.
The company said in a press release that the new prices are the lowest fixed rates it has offered since 2005. But wholesale electricity markets tend to follow natural gas markets, and natural gas prices this year hit their lowest point since 2005.
On Wednesday, natural gas futures were trading at $3.70 per million British thermal units, up 4 percent from Tuesday’s close. On December 13, 2005, natural gas futures hit an all-time high of $15.38, after hurricanes Katrina and Rita destroyed some natural gas infrastructure along the Gulf Coast.
“We’re able to lower prices as a result of lower wholesale electricity prices,” said TXU’s Dave Hennekes, vice president for residential markets, in a statement. “We’re passing these savings on to our customers.”
TXU’s announcement on Wednesday also addresses a hot political issue: Providing affordable electricity to low-income people during the hot summer.
Rep. Sylvester Turner, D-Houston, went to a PUC meeting earlier this month to ask commissioners to implement an emergency ban on electricity disconnects for low-income, elderly and critical care customers during the hot summer. Commissioners denied his request, saying consumers are already protected from disconnection on the hottest summer days.
“Electric rates this year are significantly lower than in previous years,” PUC Chairman Barry Smitherman said, and encouraged consumers to switch to cheaper electricity providers.
Turner, who has long fought to provide protections and benefits to low-income electricity customers, confronted the commissioners, accusing them of arguing the case of electricity companies rather than consumers.
“I am doing my best to calm myself down, OK? I am doing my level best,” he said. “The companies ought to be proud of you, because you have argued their case,” but “the people who are more afraid of their electricity bills than the heat itself, you did not argue their case.”
He complained that switching providers can involve hundreds of dollars in deposits, unaffordable for some people.
Turner also said he regrets voting to deregulate the electricity industry in 1999.
The PUC issued its own press release on Wednesday touting new customer protections that some companies are offering, including waiving deposits for senior citizens and more discounts for low-income customers.
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