DATELINE: 05 October 2005
TXU Energy seeks 24% rate increase
Record natural gas prices fueling largest-ever fee hike for electricity, utility says
By Elizabeth Souder
The Dallas Morning News
TXU Energy aims to increase electricity prices 24 percent by January, its largest increase ever as Texans face higher bills for all kinds of energy.
About half of the increase would go into effect by early November.
TXU said it was responding to record prices for natural gas, a key fuel used to generate power.
The company made a deal with the Public Utility Commission last month to wait until January to apply post-Katrina natural gas prices if the agency approves the increase by the end of this month.
"Oh, my goodness," Tim Morstad, an analyst with Consumers Union, a nonprofit consumer advocate, said as he began leafing through TXU's filing Tuesday. "Wow, this is very, very high."
"I think one way to look at this is that if this petition is approved, then North Texas consumers are going to feel Katrina's inflated effect on rates in January."
Approval by the commission would mean that, by January, the average North Texas household would pay 37 percent more for electricity compared with a year ago, while also paying about 50 percent more for natural gas - if prices remain high - and probably spending about $3 a gallon on gasoline. Already, some folks are scouting for ways to cope with the energy cost inflation.
"Gee whiz, every time you turn around ... insurance has gone up, taxes have gone up, TXU has gone up, oil has gone up, and you know what? We haven't gotten one pay raise, period," said Edgar Lewis, a retiree in Mesquite and a TXU Energy customer. "We don't go as much, don't eat out as often. Our fun time - recreation - we just don't do anything."
Not everyone in North Texas would be subject to the new TXU prices, if approved.
About a quarter of North Texas residents are customers of electricity providers that have cropped up since most Texas consumers received the option to switch suppliers in January 2002.
Competitors may charge any rate they please. But incumbent power providers must receive approval from state regulators until January 2007 or until they've lost 40 percent of their customer base.
Of the 12 companies competing with TXU in the region, five charge less, according to www.power tochoose.org, a PUC Web site.
Gexa Energy and Cirro Energy offer the lowest prices in the Dallas area, about 10 percent less than TXU. Cirro officials said they plan to continue to beat TXU prices.
"Although this is the most significant price increase filing to date, market pressures are very real," Tim Bell, executive vice president for Cirro Energy, wrote in an e-mail. "Natural gas is at an all-time high in the history of the market, and the ripple can be felt throughout every facet of our lives."
Marty Hoover uses Reliant Energy and has been pleased with the savings. Still, he's looking for any strategy, large or small, to conserve energy in his household and for his lawn treatment business.
"Keep the thermostat higher, only run the lights when you've got to have them. I've even gotten to the point that I turn computers off at night," he said.
Mr. Hoover said he finds it difficult to conserve electricity, but he's managed to save money on gasoline by scheduling workers for his lawn service, Weed Man, on a four-day work week rather than five, saving him a weekly trip between the office and the work site, and saving employees a weekly drive to work.
TXU Energy, the retail arm of Dallas-based TXU Corp., doesn't make money, though TXU Corp. as a whole is profitable, spokesman Chris Schein said.
That's because TXU Energy must eat rising energy costs until it files a rate increase request, which it is allowed to do only twice a year.
Mr. Morstad, with Consumers Union in Austin, pointed out the commission hasn't denied a TXU rate increase request since consumers began choosing their providers in 2002. That Texas bases electricity rates on natural gas prices, even though utilities use cheaper coal and nuclear plants to make electricity, is frustrating, he said.
TXU generates about half its electricity with natural gas. And while the TXU Energy unit is subject to the market prices for electricity, buying power from a number of sources at the daily rates, the larger company has programs in place to hedge itself against spikes in natural gas costs.
Texans are also expected to see higher natural gas costs in their Atmos Energy gas bills this winter. Executives with the natural gas utility say they expect bills to rise about 50 percent in January, if natural gas costs remain high.
For Bettye Banks, that means cutting back on a beloved hobby - cooking.
"I hardly ever cook anymore," she said. "I eat a lot of easy-to-fix stuff from the deli and salads."
She added, "I used to cook three meals a day. I cook maybe twice a month now."
Ms. Banks recently stared down a record $455 bill for electricity - most of it for air conditioning.
"Sticker shock," she said.
Staff writers Pamela Yip and Sudeep Reddy contributed to this report.
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