PEC member and energy industry professional Rick Thomas speaks against PEC deregulation

electricpoleIn a recent letter to my opponent, PEC member and Lakeway resident Rick Thomas made a great point against deregulation through well-rounded authoritative research. Mr. Thomas is an energy industry professional and is experienced in co-op management.

Mr. Thomas has provided me with a copy of his letter and has authorized me to repost its points to my Website and share its value with friends,  neighbors and supporters.


Here are the main points:

Point #1 — It is questionable whether the proposed retail rates include all applicable charges, therefore they do not make an accurate comparative schedule with PEC’s current rates.

Mr Thomas: “First, from the comparative schedule of energy prices from November 2014 (source unknown) I see that the Competitive Zone REP price is 7.8 cents. What I can’t discern is whether  the source author has included the TDU charges. If TDU charges are not included, then the schedule would seem to not be a valid comparison since I believe the other utilities’ rate would be the “all in” cost. […] In a quick web site review, I found over 20 competitive offers for eligible Texans, with an energy price ranging from 8.5 cents per kWh to almost 15 cents per kWh, all with varying terms and conditions — which can be confusing. I believe the TDU charges of approximately 3 cents would then be added for a sum total of 11.5 cents to 18 cents per kWh respectively. I even found one quote that encourages more kWh usage rather than less..the more the purchaser uses, the lower the cost. That seems counter-current to energy conservation but I guess that is the market at work. Also, I question whether the rate comparisons of cooperatives vs munis were adjusted for member density and load characteristics. Those factors can affect a comparison substantially; in my opinion much more study is warranted and necessary in such an important matter as the discussion of deregulation of PEC. It seems imperative to me that all members of PEC must understand the potential outcomes of retail competition, which fundamentally shifts the risks of the electricity market/power supply from the cooperative as a group ( the reason cooperatives were formed in the first place) to the individual member.

Point #2 — Most members have no desire to shop for retail energy sources and retail choice produces marginal results at best.

Mr Thomas: “Secondly, from my personal standpoint, my PEC electric rate is approximately 11 cents per kWh, and given the high level of service and reliability the PEC provides, I have absolutely no desire to shop for other energy sources. Interestingly, after a number of years in the electric industry myself, I had discovered little solid empirical evidence that, over the long term, deregulation at the retail level has resulted in lower rates , particularly to cooperative members. Moreover, I found most electric cooperative residential members were not interested in shopping for alternative sources of energy; however, commercial and industrial customers would likely shop. Perhaps all that has changed over the last couple of years. I think the members understand that their cooperative’s sole mission is to provide dependable and reliable service at reasonable costs. They expect to choose a Board of Directors that will work together to make good policy decisions and ” look out for the members’ interest”. 

Point #3 —The elimination of all travel and on-site training for directors would have absolutely no impact on rates.

Mr Thomas: “The example of director travel restrictions, etc. seems very small in relation to the bigger PEC cost picture. Perhaps we should continue to focus on other cost items such as long term power supply , renewable energy requirements, transmission congestion issues, and a national energy policy. I suggest the ongoing PEC Director vs Cooperative lawsuit ( Austin American- Statesman, May 6, 2015) could likely create more unnecessary legal/staff expense than all directors’ travel expense for a year, and best I can read, with no real member benefits resulting from the dispute. In my opinion, as a matter of principle, the lawsuit of this nature is unnecessary, unwarranted and wasteful of cooperative resources.”

Rick Thomas, Lakeway, TX