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
Favoritism Already?
"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 of Texas
Not Dead Yet
"It doesn't mean it's not needed because it wasn't done [in the last legislative session]. I think there were concerns about how it would be done, who would be paying it, where would the money come from, who would administer it.
"It was just not politically doable this time. But we've not given up."
- J.C. Roberts, South Plains Electric Co-op
Courtney Barry is a writer in Austin, Texas, who formerly worked for the Public Utility Commission of Texas.
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