July 1, 2001
L.A. Loves a Loophole
There's no getting around it...
While Texas ponders how best to help rural co-ops move to electric competition, some interests question whether bailouts are needed at all.
Big Fish, Little Fish
"The co-ops are like a school of little fish, all right? And there's a school of big fish out there who are going through and taking munches, okay? And if the little fish aren't protected, the big fish will eat them."
- Former ERCOT representative, on the fate of Texas co-ops
"Lots of co-ops that serve very rural remote areas [may] not see a lot of difference¼. A lot of people initially probably won't want to go through the hassle of participating in competition."
- J.C. Roberts, general manager of South Plains Electric Co-op
Are subsidies the Answer?
"We were looking at a way to help fund those higher than average distribution costs, not for every co-op necessarily, but for the ones that have the really high distribution costs and low customer density. We proposed [a Universal Service Fund] in the original legislation. We were disappointed."
- Mike Williams, president of the Texas Electric Cooperatives Inc.
"[A USF is] a popular subject on the co-op side but in the grand scheme of things, I'm not sure it's something that's feasible. ¼ But if we solve the support for it at the legislative level, we would support it."
- David Peterson, Bluebonnet Electric Co-op
"The folks in East Texas don't feel like [the USF] is necessary. We're not sure what the reasoning behind the fund is. It's to help those that have no density, [yet] we have a little over four customers per mile. The typical East Texas co-op has six to nine."
- Edd Hargett of Houston County Electric Co-op, which
serves Southeast Texas
"Every time there's been a proposal from one group or another to help one group or another, somebody feels their ox is gored. They go screaming 'the subsidy charge.'"
- Jay Morrison, regulatory counsel for National Rural Electric Co-op Association, on a USF.
"The co-ops already get special treatment by virtue of being co-ops. We don't see why they would merit that kind of special treatment. ¼ There may very well be competitors who want to provide service to remote areas or who will create rates that address that; and the market may by itself address it."
- Graham Painter, vice president, Texas' Reliant Energy Delivery Group
Why Not Tap System Benefit Fund?
"'Where does the money come from?' That's the $64 million question.
"We have in place today the System Benefit Fund that's already in [the state's deregulation bill]. You could maybe tap that fund. ¼ It's designed to collect moneys for low-income systems."
- Mike Williams, Texas Electric Cooperatives Inc.
"[The SBF] will not apply to the co-ops or the munis unless they opt into competition, because they won't be paying into it. It could apply to the co-ops if they opt in. ¼ The System Benefit Fund has very specific purposes and the primary purpose is low-income people."
- Nieves Lopez, economist with the Public Utility Commission