How Deregulating Electricity Caused Today’s Prices
Ed Wallace
July 1, 2012
When I opened my June 2012 TXU bill I was stunned. Having recently installed an all-new
air conditioning system at my home in Fort Worth, I was pleasantly surprised to find my
kilowatt-hour usage down by 700 just two weeks after installing the new unit. I was even
reasonably happy to see my charge per kWh at just 10.8 cents. Yes, I knew that many
electricity providers are charging less. But over the past seven years I’ve received hundreds
of e-mails from listeners who had thought they had an exceptional rate for electricity — and
then their provider went out of business, and they were forced into another pool, at perkWh rates as high as 24 cents. Others had signed up for variable rates, attractive at first,
only to watch their rates jump substantially out of the blue. NBC Five did a story last
summer on the pitfalls of just such variable rate plans.
You couldn’t know this, but when Gov. Rick Perry was campaigning for the Presidency I
wrote a five-part series on the true economic state of Texas for BusinessWeek — shortly after
the Bloomberg takeover. I felt it was my best work ever. My editor Charles Dubow agreed;
he loved the series and the new powers at BusinessWeek signed off for publication. Shortly
thereafter my editor was released, and the series disappeared without a trace. One of those
columns was specifically about the deregulation of electricity in Texas.
I will start off with a few quotes from that column you never saw.
“Competition in the electric market will benefit Texans by reducing monthly rates and
offering consumers more choices.” — Gov. George W. Bush, 1999, as quoted in the July 28,
2008, Wall Street Journal
Within six years of the day our electric rates were deregulated, Rebecca Smith would report
in a July 2008 issue of Wall Street Journal that “A Texan shopping for electricity today
typically would be quoted a price between 13 and 27 cents a kilowatt hour.”
As early as 1996 Jeff Skilling, former president of Enron, was quoted in the Fort Worth StarTelegram as calling the statewide average of a mere 6 cents per kWh an “absurdly high”
price for electricity. Enron believed, he asserted, that “the magic of marketplace
competition” would take one of the best utilities in the nation and unleash its full potential.
That it did — but not the way the public had been led to believe it would.
You see, it’s been long enough since all of this happened that everyone has forgotten: Just
four years ago, 13 cents a kilowatt-hour was the cheap price to beat — and in that same year
many were paying more than 25 cents per kWh for electricity. No one recalls that when
Enron started the push to deregulate our power markets in 1996, we were paying that
measly six cents per kWh; our utilities were highly profitable and our grid exceptional. And
certainly no one remembers that former Governor Bush promised even lower rates under
deregulation.
I remember. There is a check on my desk, #2154, drawn on JP Morgan Chase, dated July 3,
2000, and made out to TXU in the amount of $146.44 for my June 2000 electric bill. I had to
compare it to my June 2012 bill for $448.94. Ah, the “magic” of deregulation and the false
promise of lower bills.
Doing that comparison forced me to look closely at my current bill, on which the base
charge for electricity was just 10.8 cents per kilowatt hour. And that’s when I noticed the
TDU charge for delivery, which took my real cost of electricity up to 13.8 cents per kilowatt
hour. Many have written asking why I haven’t changed providers over the past few years
when cheaper rates became available. The answer is simple: Predictability. While I always
understood that my rate was slightly higher than most, without ever having signed up on
any specific TXU plan, my cost of electricity per kilowatt-hour neither fell by much nor,
during the huge pricing peaks in 2005 and 2008, did my rates climb by much. Obviously,
that situation has changed.
Fortunately I am not alone on this. Karen, who handles our callers, looked at her bill in the
studio Saturday and for the very first time noticed the TDU charge, which made her
effective rate 14.1 cents. She too thought she was paying much less than that for electricity.
One of our most loyal listeners, Doc in Fort Worth, wrote to say he examined his TXU bill to
find his net cost was 14.3 cents per kWh, including the TDU charge. While another listener,
whose mother used to work with me at Henry Butts, found her real cost of electricity with
TXU to be 14.4 cents per kWh.
How is it that so many people thought they were paying a much lower rate than they really
were? After all, the real net rate was on our bills, right? More on that later.
I also mentioned on air that one of my friends, a show sponsor, looked at his electric bill for
the dealership, supplied by Green Mountain Energy, and it showed the TDU fee at over
$5,000 for the month. He too was shocked at this amount. Now to be fair, his base rate for
electricity is just over 5 cents per kilowatt hour and even with that TDU fee his net cost of
electricity is around 8.5 cents. But, he was still under the impression he was paying far less
for electricity than he was; he’d chosen his dealership’s electricity provider because he
thought their net per-kWh rate was just over 5 cents, just as I thought I was paying TXU
10.8 cents. And so on.
That brought up the second part of my realization that things had changed. There is a
disclaimer on the TXU bill as to this charge. It reads: “TDU Delivery Charges are regulated
fees from your TDU for the delivery of electricity. Previously they were included in your
energy rate, but are now itemized separately.”
Fair enough, but reading that disclaimer you’d think that every last provider of electricity
should be charging customers the exact same amount for the “delivery” of electricity. After
all, in a world where everything else about electricity is deregulated, the word “regulated”
in the TXU disclaimer should mean that this fee is.
Fortunately, our show has one of the largest and strongest demographic audiences in radio
for North Texas. We owe a great deal of thanks to R.L. in Dallas who sent me his TXU bills
for June for the current and previous two years. In 2010 under the TXU Energy Freedom
Plan, it showed only his advanced meter charge of $2.19. And an Oncor rate charge of $2.78
— but his net charge for electricity was 13.3 cents per kWh. In 2011 his charge for the smart
meter was the same, the Oncor rate was now $4.29, and his net cost per kWh was 13.2 cents.
Then came his bill for 2012. R.L. is now on the TXU eSaver program, paying a TDU charge
of $45.51, but with a net cost per kWh, including the TDU fees of only 9.8 cents. That’s
because his base rate for electricity is now 6.2 cents.
For those of us, including myself, still with TXU paying 14 cents per kWh, R.L. has shown
us just how foolish we are. Still, though he has cut his basic rate by more than half, adding
the TDU charge means his net cost of electricity per kilowatt hour is down only 25.76%. Still
impressive overall.
So I’ll make the point again. Of the more than 300 e-mails sent me on this issue, all but a
handful had no idea whatsoever that there was a TDU charge broken out on their electricity
bills. Then again, some providers don’t charge the fee at all.
At least, they haven’t yet.
This would be a great time to remind everyone where we started with all of this. Regulated
electricity in Texas gave us an average rate of 6.04 cents per kilowatt-hour and that was allinclusive. Electricity, the grids, repairs to service, everything.
For some in Texas whose electricity is provided by cooperative services, or co-ops, it’s 1996
even today. Dan wrote from Grandview, where his service is provided by United
Cooperative, with a base rate is 4.65 cents per kilowatt-hour. While they don’t have a TDU
charge, it seems similar to their United Delivery Charge, which in his case was $27.48. Of
course, when you start with less than a nickel for a kilowatt-hour of electricity, even with
that secondary figure your net is still remarkably cheap. He adds that the co-op also tacks
on a monthly customer charge of ten bucks.
Meanwhile, Denna in Kerrville reminds us that, in areas of Texas that did not opt into
deregulation, electricity prices are still exceptional. The Kerrville Public Utility charges just
6.46 cents per kilowatt-hour plus a distribution fee of .01622 — totaling around 8 cents per
kWh for electricity. She asked me to kindly not give her municipality any ideas on new
ways to charge their customers.
Brian wins hands down with United Cooperative, where the per-kWh rate is 2.66 cents;
even paying the monthly United Delivery Charge of $42.62, he’s got the best deal of all.
Again: Everyone could be paying far less for electricity under the old regulated system.
Going back to TXU for a moment, Frank wrote and sent us his TXU bill for the month of
May. It shows he is paying 8.5 cents per kilowatt-hour and zero charge for TDU. His June
bill raised the rate to 9.2 cents, but still showed no charge for TDU. This follows another
new car dealer I spoke of on the show who has service with TXU and found no charges for
TDU on his billing.
Two wrote in from Iowa Park and sent copies of their TXU bills. The one with the TXU
Texas Choice, is billed at 10.1 cents per kilowatt-hour; the other is called TXU Energy
Sensible and bills at 8.7 cents. Again, neither one has any billing for TDU charges. And I’m
sure the person on the TXU Texas Choice Program wishes he were more TXU Energy
Sensible.
From here, I’ll simply post many of the varied e-mails on providers, charges per kWh and
TDU, or lack thereof.
From Adbiel: Texas Power: 8.4 cents, TDU charge $2.10
Mr. Schwitzer: Champion Energy: 8.4 cents, TDU charge $3.18*
Dave: Reliant: 5.4 cents, TDU charge $71.90; net cost with TDU, 8.3 cents.
Bill: GEXA: 6 cents, TDU $115.55
Byron: StarTex: 9.3 cents, including the $3.24 TDU charge.
Charles, also with StarTex, is paying $3.28 for the TDU.
Dean: Champion: 8.8 cents, TDU charge $3.18*
Eddie: Stream Energy: 9.5 cents, TDU charge $3.18*
Gigi: StarTex: 8.6 cents, TDU charge $41.56 — but still a net 8.9 cents
Harvey: Direct Energy: 7.8 cents, no TDU charge.
Howard: Amigo Energy, ??? cents, No TDU Charge
Jeff: Denton Municipal doesn’t have a TDU charge.
Jerry: GEXA: 8.66 cents, but that figure includes the $40.79 TDU charge.
Jim: Amigo Energy: 9.1 cents, no TDU charge.
Another Jim: Amigo Energy: 7.4 cents with no TDU charge.
John: Champion Energy: 8.4 cents, no TDU charge
Joe: Infinite Energy of Georgia: 4.8 cents per kilowatt hour, net with TDU delivery, 8 cents
Larry: Dynowatt: 8.85 cents, no TDU charge
Micheal: Conserv: 8.94 cents, no TDU charge
*Where the TDU charge is shown as $3.18, this actually combines the Smart Meter and
energy efficiency cost recovery charge of 99 cents. It’s not a delivery charge.
As you can see, even in places with companies that list a specific TDU “regulated charge”,
the amount it adds to one’s kilowatt-hour rate varies widely — anywhere from a penny to
nearly 4 cents.
M.D., who has made a science of this, wrote, “If you compare bills from different
companies, TXU, Reliant, Amigo, etc., you will see that there is no standard format for
breakdown of charges. There isn't even a standard for capitalizing ‘KWH.’ Each bill is
different.” How right he is.
But we also have an official version of this TDU charge. It reads: Change to Oncor TDU
charges: Some residential customers in Oncor service territory will see a line item charge on this bill.
Effective beginning September 1, 2011, Oncor has been authorized by the Public Utility Commission
to increase their rates for Rider Transmission Cost Recovery Factor (TCRF) by a net $0.0014 per
kwh. This charge represents the actual price change for transmission and distribution service allowed
by Public Utility Commission rules.”
Obviously, many individuals’ bills do not reflect that actual cost. Moreover, it doesn’t fully
answer the question on why some in the Oncor region get billed the TDU delivery fee and
others don’t. Again, it shows how deregulation takes advantage of most but not all users of
electricity.
Harold Willis, one of our great listeners, works with our senior citizens on many critical
issues in their lives. He added to this conversation, “Many Senior Citizens I work with are
so confused and upset about this and they cannot figure out what they are really paying!
Please talk about the seniors who are on fixed incomes getting ripped off by this
scam! Thanks again for all of your hard work and letting the public know what is really
going on.”
As an aside, numerous individuals with the new Smart Meters and Smart Thermostats
inside their homes tell us they are not happy with that decision. I carried one such story in
Second Hand News on Saturday, but Frank in Mansfield added this to the discussion: “I am
on the basic rate with the “dumb user-smart electric vendor” thermostats. The thermostats
are connected by WIFI to their router. The router is hard-wired 10 base T to my 2-wire
device from ATT. When we put the thermostats in they told us the longest they would turn
our AC off would be 30 minutes. The only time they turned the AC off it was off for 2
hours. They no longer turn my thermostat off.”
Ed in Farmers Branch added the following to the overall story.
“And getting correct information looks difficult at best too. Don't know if you saw this ...
Steve Egar [Fox Four] had Ken Anderson of the PUC on the 9 p.m. news last night.
Anderson repeatedly said the best way to lock in your rate and not be subject to price
increases is to get a long-term contract. He apparently is unaware of or conveniently chose
not to mention that the electric retailers TXU and Reliant, among others, are asking to break
those very contracts with their customers with the boost in peak rates.”
Ed is correct, and I covered the fact that Reliant and TXU have requested the ability to break
all of their contracts should the wholesale cost of electricity go up. That information is from
numerous stories in the Houston Chronicle.
Having carefully examined all of the pertinent facts involved in this, it is my conclusion that
the TDU charges for many companies, including TXU, are being portrayed on bills to
obfuscate the real net cost of one’s per-kilowatt-hour charge. Like myself and three others
with TXU, I thought I was paying a slightly higher than average rate, only to find I’m
paying more for electricity than in the peak years of 2005 and 2008. Many with other
electricity providers say the TDU fee in combination with the per kilowatt-hour charge
equals the correct amount that they signed up for.
To be fair, it shows on your bill what the real net charge is, so they can’t be blamed for not
putting it there. It’s just that it should be placed in the cost of service column with all of the
other charges. If this were a retail finance contract, such as those used to purchase
automobiles, it would have to be in 12-point bold type on everybody’s bill. Moreover, all
bills from electricity providers would also have to be standardized so that customers could,
easily and with full understanding, make the right and proper comparisons to decide which
provider to use.
But that’s not really the intent of deregulation either. By looking at the vast difference in
what our neighbors are paying for electricity, (The Dallas Morning News reported that they
are almost 250 different plans for electricity today) with or without the TDU fee, you see
that we have become a state of “every energy user for himself.” Where once you did not
give a second thought to your electricity charges, now we are all wondering if somehow or
another we’re being taken at the roulette wheel of electricity pricing. Moreover, as we found
out in 2005 and 2008, what looks like the deal to beat all deals for electricity today can
quickly change to become the worst deal ever if the market flips.
So I will take you back to 1996: We averaged an electric rate of 6.04 cents per kWh in Texas.
You didn’t worry about rolling blackouts, you didn’t have the electric company turning off
your A/C for hours, and you weren’t shocked by a 35% increase in your bill because of a
TDU charge to build a new Smart Grid. No, it was all predictable. It was one less thing to
worry about in your family’s finances. Texas made sure all of us were treated fairly and we
had reliable service.
Possibly the saddest commentary in all of this is the listeners who wrote and said they keep
their thermostats at 80 degrees because they can’t afford the electricity to keep their houses
any cooler. And those e-mails come from some of the nicest suburbs in Dallas Fort Worth.
This is not a scientific study of this issue. In order to make a full comparison of where we
are today, I would have to have listed every provider, kilowatt-hours used, and net cost of
service with or without a TDU charge. And had bills from previous years to validate the
difference in pricing. Then again, that’s something every electric bill should show —
standardized full disclosure, not just the kilowatt hours used per month over a year long
period.
And I should have asked everyone if their real net cost per kilowatt-hour is exactly what
they thought they were paying. For what it is worth, some did know. Many others didn’t,
with some TXU customers the most shocked at their real net cost per kilowatt hour.
Although my friend the dealer thought he was paying 5 cents per kilowatt hour, not the 8
cents including the TDU fee.
But let me remind you that the original promise made was that if we deregulated electricity
it would lower your cost of service while giving you more options. True, today you have
too many options, but over the past eight years electricity cost you far more.
Below I have included the unpublished BusinessWeek column I wrote in 2011 on this issue.
I’m proud of all of you who got exceptional deals this year for your electricity and hope that
it remains a good value for you. But there’s something in the back of my head that says this
story isn’t finished yet.
And by the way, one of the most under reported issues for deregulation of electricity in
Texas happened three years ago. Texas Senate bill 547 was passed and signed into law by
Gov. Rick Perry. That law effectively stopped deregulation of electricity for those being
served well by the Southwestern Electric Power in Northeast Texas. That’s right, we
protected the rights of many Texans keeping them out of the mess the rest of us are in. Or,
one State Senator protecting his citizens from what everyone knows has been a disaster for
everyone else.
Here is a summary of that bill.
SB 547 - Delays indefinitely retail electric competition in areas of east Texas currently served by Southwestern
Electric Power Co. (SWEPCO)
Senate Bill 547
Effective: 9-1-09
Senate Author: Eltife
House Sponsor: Hughes
Bill Summary:
Senate Bill 547 adds provisions to the Utilities Code relating to the transition to retail electric competition for
certain areas outside of the Electric Reliability Council of Texas (ERCOT). It makes such provisions applicable
to an investor-owned electric utility that is operating solely outside of ERCOT in areas of Texas included in the
Southwest Power Pool on January 1, 2008, that was not affiliated with the Southeastern Electric Reliability
Council on January 1, 2008, and to which provisions for certain other non-ERCOT utilities do not apply. The
bill delays the introduction of retail competition for such an electric utility until fair competition and reliable
service are available to all retail customer classes in the area served by the utility. It establishes a sequence of
required events, in five prescribed stages, to be followed to introduce retail competition in the utility's service
area. The bill authorizes the Public Utility Commission of Texas (PUC) to modify the sequence of such events,
but prohibits the PUC from modifying the substance of the requirements. Until the date the electric utility is
authorized by the PUC to implement retail customer choice, its rates are subject to regulation under the law on
electric rates, and until the date the utility implements customer choice, statutory provisions relating to the
restructuring of the electric utility industry, other than those of the bill and those relating to goals for
renewable energy and energy efficiency, do not apply to the utility.
-Ed
EDITOR: Charles Dubow
STRAP: Wallace’s World
KEYWORDS:
HED: Greetings from Texas: Utilities
DEK: Don’t believe everything you hear about how well Texas works
BYLINE: Ed Wallace
[Text begins: 2,406 words, incl. 16 in section subheads]
“Competition in the electric market will benefit Texans by reducing monthly rates
and offering consumers more choices.” — Gov. George W. Bush, 1999, as quoted by
the Wall Street Journal July 28, 2008
Under Governor George W. Bush Texas electric utilities were deregulated. That
move swiftly took our citizens from having among the lowest kilowatt-hour electric
rates in the United States to paying rates that were among the nation’s highest.
Worse, as with our budget shortfall, Texans were again being set up.
As early as 1996 Jeff Skilling, former president of Enron, was quoted in the Fort
Worth Star-Telegram as calling the statewide average of a mere 6 cents per kWh an
“absurdly high” price for electricity. Under Enron’s plan, he asserted, “the magic of
marketplace competition” would take one of the best utilities in the nation and
unleash its full potential. That it did, but not the way the public had been led to
believe it would.
Within six years of the day the electric rates were deregulated, Rebecca Smith
would report in a July 2008 issue of Wall Street Journal that “A Texan shopping for
electricity today typically would be quoted a price between 13 and 27 cents a
kilowatt hour.”
Depressing Business
The state’s much higher costs from deregulated electricity have hurt not just
individuals and families but all businesses, too. Smith’s Wall Street Journal article
discussed the problems at the Alcoa Aluminum smelter in Rockdale after
deregulation. Up to that point Alcoa had been paying 3.8 cents per kWh, but the
service provider’s nearby power plant was not providing reliable service. So Alcoa
decided to take a chance and buy electricity on the deregulated spot market, a
disastrous move that resulted in the aluminum company’s paying $2 to $4 per
kWh. Alcoa spokesperson Kevin Lowery mourned, “There are days we’ve lost
millions of dollars. You can’t run a business that way.” Alcoa estimated that,
between the lower output of the smelter and the shockingly higher electricity costs,
their studied move to obtain a more reliable electricity source might have cost
them more than $44 million.
Two months later Alcoa found a final solution: They simply shut down their
Rockdale smelter operations, putting 820 Texans out of work.
Then this September 29, Fuel Fix reported that Valero, one of the largest refinery
operators in America, has put its electric grid operator on notice that they need to
improve their service’s reliability. Already this year Valero’s Texas City refinery has
had four major power outages. Then again, in spite of the much higher rates we
pay under deregulation, Texas has dealt with something that no one expected: The
threat of rolling blackouts.
Customers would lose power for anywhere from minutes to 12 hours during the
brutal cold snap that hit the state this past February, and in late August it almost
happened again. On August 24, the Electric Reliability Council of Texas put the
state into Energy Emergency Alert Level 2; they had to ask certain high-level
industrial users of electricity to shut down their operations, lest they have to
institute rolling blackouts.
And it’s not just the large users of electricity that have been faced with higher costs
and, in rare situations, curtailed electric service. Tom Ryan, owner of Metroplex
Toyota in South Dallas, figures conservatively that higher electric rates have cost
his dealership more than a million dollars in profits over this last decade.
Accountability Outage
There’s also a personal side of electric deregulation in Texas, one covered well by
the Texas Observer in 2006. They told the story of Doris Marshall, living outside of
Waco on nothing but $514 a month from Social Security. In the four years since
deregulation took effect, TXU, her electricity provider, had raised its rates seven
times — effectively doubling her electric bills.
That column appeared in June of that year, but already 126,000 Texans had called
for state assistance in paying their electric bills — and that was before the summer
heat really hit. The problem was that the program that had once helped lowincome Texans who couldn’t afford their electric bills had been eliminated. Why? It
wasn’t that all Texans weren’t still paying into that fund every month as part of
their electric bills to help those individuals; but in 2005 our legislature had started
transferring those monies into General Revenue.
Of course, no one outside of Texas, save those who read Rebecca Smith’s brilliant
series of articles in the Wall Street Journal on this issue, understood the full
financial impact of this fiasco on all Texans, including our businesses and
industries. Instead, Americans outside the state were treated to disingenuous
articles from groups such as the Heritage Foundation, which in 2007 called Texas
“the national leader in deregulating electricity markets.”
That article went on to claim that deregulation of electricity rates in Texas “had led
to a surplus of electric generation capacity and there had been no major
blackouts.” The last part was true at that time, but certainly not the first part.
But Heritage also quoted Barry Smitherman, a member of the Texas Public Utility
Commission, as saying that “Competitive rates in ERCOT are not much different
from where they were before the retail market was deregulated.”
According to the Energy Information Administration, the Texas kilowatt-hour rate
was 6.04 cents in 1999; and in the deregulated areas of Texas it was more than
double that price by the time Smitherman said what he did.
It got worse. By the summer of 2008 Texans were paying the one of, it not the
highest rates in America for electricity.
That’s one great thing about Texas — for politicians, anyway. Our appointed
officials can say outrageous things like this, which everyone knows is absolutely
untrue because we all get an electric bill every month. Yet those individuals not
only keep their government positions, they also frequently get promoted. This July
Governor Rick Perry moved Smitherman over to the far more powerful Texas
Railroad Commission.
Deregulation Un-Sells Itself
A decade ago, more than 20 states were hooked into the idea of deregulating
electricity to varying degrees by the misinformation and false promises being
lobbied by Enron’s executives. But it is interesting to note that because of the
problems in California a decade ago and in Texas during this past decade, the
Energy Information Administration shows that many states have suspended their
plans for fully deregulating the market. Including New Mexico, Montana, Arizona,
Nevada, California, Arkansas and Virginia. Meanwhile, here in Texas we continue
to hear from people like State Rep. Phil King, R-Weatherford, who has claimed that
“the new system is working exactly as it was supposed to work” — and anyway,
“it’s too late to put the toothpaste back in the tube.”
There is, of course, a green side to Texas deregulation: Our wind farms, which
cover the western part of our state. In fact, we’re so green that we already have
over 10,000 megawatts of wind-generated electric capacity in place. That’s more
than three times as much as any other state has — not that it does us much good.
Remember when temperatures in Texas this summer topped the 105-degree mark
day after day? Our electricity demand statewide hit almost 68,000 megawatts; and,
in case you didn’t know, on a hot summer days in this state there’s rarely a breeze.
As my friend Robert Bryce, author of Power Hungry, The Myth of Green Energy and
the Real Fuels of the Future, pointed out in a column for the National Review in
mid-August, there was only enough wind to create 1,500 megawatts of electricity
during the most critical days. Meaning about 85% of those windmills were
apparently built just for show, because for lack of any wind their turbines weren’t
turning. As Bryce noted, for the $17 billion invested in these bird catchers and the
$8 billion now needed to build more transmission lines to those wind farms, Texas
could have built 25,000 megawatts in extremely reliable natural gas power plants
and created a massive surplus in overall capacity.
Let’s put a hard number on what deregulation has done to Texas families’ budgets.
In July of 1995, my bill for electricity came to $192; this past July (in the same
house) it was $515.79. And in the summer of 1995 no one was warning us to
expect possible rolling blackouts.
Bring Your Own Water
A society based on capitalism needs government to provide more than just the
basic framework for energy; it also needs infrastructure and water. Contrary to the
global-warming crowd that blames the current Texas drought on manmade
changes in our atmosphere, many Texans have lived through three major longterm droughts. Certainly when the rains left the Texas Panhandle in 1931, it would
be eight long years before any measurable rainfall fell in that parched land again.
Likewise, Texas suffered its worst drought on record from 1950 to 1957.
In the past, however, Texans who had lived and suffered through long droughts
took action. Construction of man-made reservoirs such as Possum Kingdom Lake
started in 1938 in the last days of the Dust Bowl, and there were more. The
massive Cedar Lake southwest of Dallas was completed in 1965; construction on
Joe Pool Lake started in 1977 and was completed in 1985; and Lake Ray Roberts,
just north of Dallas Fort Worth, was completed two years later.
However, of the 18 major lakes and man-made reservoirs in the North Texas
region, 2 were completed before 1930, 9 more came online before 1960, 3 were
added before the decade was over, and another three finished by 1985. But after
Richland Chambers was finished in 1987, for new major reservoirs Texas is coming
up dry.
For multiple generations Texans well understood that, since droughts every few
decades were the norm, lakes and manmade reservoirs were crucial to our state’s
population growth and economic success. And 14 years ago we thought that
meeting the water needs of future generations was still in such doubt that our
legislature approved a statewide water plan, which our then Lt. Gov. Bob Bullock
called “the heart of our legacy.”
The problem with this noble-sounding notion is that over the last 14 years no one
in Texas has come up with a workable plan to actually fund this desperately
needed water supply. Not to belabor the point, but that certainly was not how our
parents’ and grandparents’ generations would have done things.
Water is one of the fundamentals of life, and our predecessors’ creation of lakes
and reservoirs across the state from the late 1930s to the mid ’80s was
phenomenal. The Houston Chronicle discussed this on August 18 this year,
pointing out that the state’s increased population — a point our politicians
routinely brag about — “has severely strained the state’s [water] infrastructure.”
According to that same article, the state agency in charge has identified $53 billion
needed to expand our water capacity by 2060. That figure does not include the
estimated $142 billion it will cost to create the water treatment plants, flood
control and pipelines to carry the water. Former State Representative Ron Lewis,
who once chaired the House Energy Resources Committee, assessed this pressing
problem far more bluntly: “There’s no way we’re going to have enough water 50
years from now to take care of the population growth. We may not be able to take
care of the water needs in this state for the next 15 years.”
Hard Issue Evasion
Lewis has good company in the form of our Lt. Governor, David Dewhurst, the man
many GOP supporters had been hoping would one day succeed Rick Perry as
governor. Unlike most career politicians, Dewhurst came to his position after a
long and extremely successful business career in Houston. He does not speak like
a politician, but talks about major issues like a business pragmatist. And in a
private meeting with supporters in Weatherford, Texas, in February of 2010, he
addressed the need to improve our highway systems and our water supplies.
On that day he was talking not about a crisis 50 years out, but about one that
could potentially damage our economy in as few as 10 to 15 years. He also wisely
pointed out that the longer we take to make the hard decisions and get these
projects underway, the higher the costs will be. As I wrote in the Fort Worth StarTelegram of that day with the Lt. Gov., “So much political speech today is
meaningless and angry tripe, designed solely to inflame the passions with red
herrings in order to get the party’s registered members to go out and vote (sorry,
Palin fans). What’s rare is when someone sincerely wants to tackle hard issues, not
just slam the opposition party — because the issue is more important than the
politics of it. America would do well to elect more individuals like Dewhurst.”
So we’ve had a water plan in place since 1997, but precious little action taken to
increase our water supplies since that date. This in spite of the fact that we have
technically been in drought for five of the last seven years. And now our state
climatologist, John Neilson-Gammon, has told Reuters this drought could
potentially go on for another nine years.
Hardscrabble Future?
Over this past year electric rates have come down in Texas, and this has led many
to write that deregulation is finally working as it was supposed to all along. But
mostly these prices mirror those of natural gas on futures markets; should they
spike in the future, the promise of deregulation will again reveal its falsity. For the
record, the EIA shows that in 1999 our kilowatt-hour cost was 6.04 cents and in
2009 had jumped to 12.38 cents. That’s a far cry from our neighbors in Oklahoma,
who were paying a mere 8.49 cents per kWh.
We are running out of water, too, and there is no real push to correct that
situation either. For Texas, this decade has seen our elected officials do little to
deal with the critical issues all Texans have faced. Still, the real magic of Texas —
in which critical issues are ignored with the mindset of, “Well, what are you going
do?” — comes through. Texas prides itself on its hardscrabble history, on
succeeding no matter what is thrown our way. So we ignore these issues, “put our
ears back,” and focus on just doing more business and toughing it out.
And that’s truly the heart of Texas.