Members of Central Texas Electric Co-op Board District 3 (Mason/Menard/McCullough, Northern Kimble County), met Tuesday, June 5th in the Mason Junior High cafeteria. The members were welcomed by the co-op’s Chief Executive Officer, Robert A. Loth III. Mr. Loth opened the meeting with the introduction of members of the co-op’s Board of Directors in attendance. They were: Riley Kothmann, Board Vice President, and Jack Asbill, from Mason County; Gerald Kaspar, Board President, Stanley Keese, Board Treasurer, and W.C. (Dub) Stewart, Board Secretary, all of Llano County; Doylene Bode, Charles Pearson and Bill Weldon of Gillespie County; Rex Brand of Kerr County, and Allen Goodwin of Kendall County.
In the Board election part of the meeting, Mr. Loth announced that only one application was received from District 3. Therefore, after receiving a nomination and a second, Jack Asbill was elected by acclamation of members present, to be the District 3 nominee for director. He will now be on the election ballot at the Annual Meeting of CTEC members in August. Asbill is seeking his third term on the Board of Directors (CTEC term limits are set at four three-year terms.)
Loth then introduced a special video reviewing the 10 years since the State Legislature implemented electric deregulation, or “retail competition” in January 2002. In the video, Gerald Kaspar asks “After a decade, is it good to look back and ask - Did it work?”
At that time, there was a prevailing attitude that investor-owned utilities were making too much money and consumers were paying the price. The law opened up large portions of Texas to retail competition, but the law also allowed electric Co-ops and municipally owned utilities to determine if and when, retail completion would take place in their service area. Kaspar said, “The answer is very complicated and the jury is still out on how successful this experiment has been. So let’s take a look at what this could mean for CTEC”.
Dub Stewart, Director from Llano County explained that prior to deregulation, an investor owned utility would typically own and provide generation, transmission, and distribution facilities. Electricity flowed directly from the utility to the end-user. But with deregulation, the market was opened and allowed many more participants to market generation, greatly increasing the complexity of the electric utility market in Texas.
Doylene Bode, Director from Harper, said the theory was that free market and competition would keep a lid on rates and there would be more choices and better services. Citing a recent study completed by the Texas Coalition for Affordable Power, Bode said, “The average electricity prices in Texas, both inside and outside deregulation (CTEC is outside), have declined in the last two years. However, Texans inside deregulated areas have consistently paid MORE for power than those outside – 9 to 46 percent higher”. The trend proves true nationally also.
Riley Kothmann from Mason County then reviewed survey findings on costs and service comparisons. He said, “In addition to increased costs, deregulation had the unintended consequence of decreasing electric reliability for everyone in the ERCOT service area”. Two statewide rolling blackouts were necessary in the years since deregulation, and in 2011 alone, there were at least nine threats of rolling blackouts. Prior to deregulation, Texas experienced rolling blackouts only once in 30-plus years.
To add to the confusion, customers in deregulated areas must choose their own contact terms – often a version of “let’s make a deal”. Contracts from 3 months to 12 months are typical, with only one found offering a 5-year contract. Once the contract expires, the customer is left to do the research all over again and either renew or switch providers.
“To say that we have a mess on our hands might be an understatement. Right now, regulators are scrambling to fix the problem”, said Stewart.
Kothmann offered, “We do have good news for you. You already own an electric company that navigates these gotchas and gimmes for you. For over 66 years, CTEC has professionally evaluated the wholesale power market to find the best deal possible for their member/owners”. CTEC takes the actual cost of power used, plus fuel premiums, the cost of providing and maintaining lines, and service personnel – and that is your bill. Plus each year, members are paid a return on their investment in the form of Capital Credits. In deregulated area, for-profit companies add up the costs, add a profit for their investors, and customer never see anything back.
Gerald Kaspar summarized, “As a cooperative, we, and I mean staff, Board, and members, will need to further evaluate the [many] costs and [few] benefits associated with retail competition before a decision could be made to adopt it. Let me assure you that we are committed to doing what is in the best interest of our members”.
After the video, Mr. Loth gave attendees a brief update on the Co-op’s power supply situation. He said that litigation was still on-going with LCRA, but that attempts are still being pursued to reach an early resolution. Meanwhile, CTEC has contacts in place until 2021 with CPS Energy to provide the Co-op its power needs. Loth also announced that CTEC now has a Facebook page that members can access for information.
The meeting finished with a question and answer session with CEO Loth, and a drawing for door prizes.