I’ll admit, I didn’t even know there was a complaint process for this.
No longer seen at I-10 and Sawyer
The Texas Consumer Association filed a complaint Wednesday asking the state utility regulator to deny CenterPoint Energy the ability to continue to pass on the costs of its barely-used mobile generators to ratepayers.
The nonprofit consumer advocacy group also asked the Public Utility Commission of Texas to order CenterPoint to refund its Houston-area customers for any rates already collected for the generators. If and how the PUC chooses to respond is unclear, as “we’re wading into uncharted waters here,” said TCA President Sandie Haverlah.
TCA’s complaint comes two months after the Chronicle reported that CenterPoint has not used its fleet of 15 large generators, including after Hurricane Beryl, which left more than a million of the utility’s customers without power for days. Regulators have allowed CenterPoint to recoup the cost of its generators and earn a 6.5% profit from them since 2023.
CenterPoint paid most of its $800 million lease with vendor Life Cycle Power in advance. The lease covers ongoing use of the large generators and five medium-sized ones. The utility has said the contract can’t be terminated. Approximately $350 million of those costs have been passed onto ratepayers thus far, which has added $2.39 per month to the average residential customer’s electricity bill.
Haverlah said she decided to file the complaint because she’s concerned that lawmakers’ heated rhetoric on CenterPoint’s generators won’t result in customer refunds.
“I’ve been trying to figure out a way to push the envelope on how to stop the payments for the generators and to maybe even attempt to claw back the money,” Haverlah said. “I don’t want to wait until the legislature, because even if they claim they’re going to do something, I just doubt it’s going to be anything that gets money back on the customers’ bills.”
[…]
In TCA’s complaint, Haverlah wrote that CenterPoint “misrepresented the mobility, flexibility, and usability capabilities of these generators,” echoing lawmakers and regulators who say CenterPoint misled them to believe the large generators were mobile and could help restore power after storms damage the utility’s power lines and poles.
Haverlah also targeted CenterPoint’s process for securing the generators, which she called unreasonable and imprudent in the filing. That’s because CenterPoint didn’t adequately study what types, sizes and quantities of generators would help restore power, she wrote. CenterPoint representatives have testified the company didn’t provide an in-depth analysis to justify its decision to lease 500 total megawatts of generators, much more than other Texas utilities.
“Any utility expense of that magnitude should be supported by bulletproof research and analysis supporting the validity of the need for the expenditure and its magnitude,” Haverlah wrote.
See here for the previous update. I agree with Haverlah’s assessment of the Lege and its odds of taking meaningful action. They might – they’ve said enough things to make that a real possibility – but regulating and enforcing consequences on wayward utilities is not their priority, not by a long shot. Taking action was the right call.
And ideally, it should be a simple call for the PUC. If this were the real world, CenterPoint would be eating a loss for their bad investment. They should face the same fate in the “regulated monopoly” world where they do live. If their investors find out that they are not guaranteed a profit, that they can in fact lose money if CenterPoint does stupid things, that will disincentivize them from doing those stupid things. That’s how economics is supposed to work, as I dimly recall from my undergraduate days. This is not a hard case. I have no idea what the PUC’s complaint process looks like or how long it may take, so we’ll just have to wait and see.
Centerpoint did exactly what the incentives asked for-obtain generators to replace power from generating plants that shut down in bad weather. Therecwas never any intent for these generators to be used when power lines and poles were damaged. If the power lines are down, generators are useless as there’s no way to deliver the power. I don’t see Centerpoint as the bad guy here. And if there’s no cost recovery, if I were Centerpoint, the next time there’s a Uri event I would tell you all to freeze to death.
If the PUC had done its job, it would never have approved the lease plan without demanding a great deal of justification and then independently look into the program. By the same token, there were a number of elected officials requesting the PUC go ahead with the plan, later claims by any that they were misled sounding more like they didn’t do their job either. In a perfect world, voters would select better representatives when they found out about it.
Somebody please educate me on why municipalization is not an option, because this seems like the perfect time to consider the idea with an open mind. The state, the city and customers are all unhappy with Centerpoint at the same time. What is the obstacle to having the City of Houston buy the utility and run it for the taxpayers/ratepayers instead of running it for shareholders who don’t live here?
Where does the money come from to buy out Centerpoint? What if the non-City of Houston areas do not want to participate? Do you think the City is actually capable of running a power dustribution system? What makes you think a municipal operation would be better?
Being privately run does not always mean it is better. If so, why not go to a private army or police force? I recall when businesses like Center Point and Reliant were publicly regulated. I believe Austin still does, and their rates tend to be cheaper.
https://austinenergy.com/about/company-profile/benefits-of-public-power
Austin is not the only Texas city that regulates energy.
https://www.kvue.com/article/news/local/austin-energy-only-provider/269-20719264-cd2a-4b9e-b5ce-ed0fbd95643d
Ross, thanks for helping me understand this better. Where does the money come from to buy out Centerpoint? Maybe a bond issue, certificates of obligation, or some other kind of debt instrument, repaid with taxes and monthly payments over time. What if the non-City of Houston areas do not want to participate? Maybe they get carved out, but I don’t sense a groundswell of popular public opinion in keeping CenterPoint. Do I think the City is actually capable of running a power distribution system? Apparently, CenterPoint is not … What makes me think a municipal operation would be better? I think it might be cheaper and more reliable, based on the performance of city/county owned utilities, whose ratepayers, generally speaking, get a more reliable, better-performing system for less money.
As a whole, public power utilities have lower rates than other types of electric utilities. Public power utilities have the lowest overall rate in 36 states.
In 2022, the average residential rate for public power utilities nationwide was 14 cents per kilowatt-hour. Looking at simulated average monthly electricity use and rates, public power customers have the lowest bills and pay 9% less than customers of other utility types.
https://www.publicpower.org/public-power/stats-and-facts