Texas free-market myth exposed in blockbuster lawsuit that could reduce your electric bill

Texas Supreme Court Justices face a test. Should the state redo the corporate bailouts after the 2021 ice storm? Or should judges leave everything as is causing us to pay back bonds for 20 or 30 years on our electric bills

Before I show how Texans could see a dramatic reduction in their monthly electric bills, The Watchdog has another electricity-related matter I want to share.

Maybe I’m just feeling a little ornery today, but this is going to tick off the Texas-love-it-or-leave-it crowd.

They think that we live in a free-market economy where the government doesn’t interfere with matters like price controls and supply and demand. Ha!

The corruption we witnessed after the 2021 ice storm shows that to be fiction.

Remember the $6.3 billion in bonds Texas bought to bail out electricity and gas companies that were forced to overpay for electricity? We customers will be paying some of that back until the year 2049.

The hypothesis I present here was explained to me by Ed Hirs, who teaches energy-related classes at the University of Houston. His thought is that Texas is more of a Soviet-styled society than it wants to admit.

Comparing the dynamic Lone Star State to the crusty old Soviet dictatorship is sacrilegious, for sure. Ed offers up three pieces of evidence — actually a fourth if you include Gov. Greg Abbott comparing himself to Vladimir Putin, but we’ll get to that.

Let’s start with the bailouts. Do you remember voting to approve that? Even though you are the payer nobody asked your opinion. Not capitalism’s finest hour.

We’ve got price fixing by the Public Utility Commission during the storm which kept electricity prices at its maximum peak for several days. Stalin would be impressed.

Next, we’ve got a ruling by Texas Supreme Court Chief Justice Nathan Hecht in a 5-4 vote that electric grid operator ERCOT cannot be sued. ERCOT, he declared, is an “arm of the state government.”

“What does that phrase sound like?” Ed asked.

Finally, we have Gov. Abbott in 2022 saying at a political rally I attended: “Texas has a larger economy than countries like Australia and Russia. The Texas economy is larger than the economy of Russia,” he repeated for emphasis. “And that makes me more powerful than Putin.”

At the time, I thought he was joking. Do I still believe that? Nyet.

Unwinding bailouts

Why do I bring this up? Texas has an opportunity to dump this Soviet mentality with one of the most important electricity cases the Texas Supreme Court has ever heard. This blockbuster case could lead to lower bills and restore capitalism to the electricity world.

The Texas Supreme Court heard arguments recently in a case in which a group of electricity companies are asking the PUC to “unwind” or “reprice” the bailouts.

In a shocker, a lower appeals court ruled in favor of the electricity companies, forcing the case to the state’s highest court.

Unwinding is the key word. Picture a giant ball of twine and each strand represents a buy/sell transaction involving an electric company, its customers who struggled to make storm-related payments and energy suppliers. Court papers show there were 55 billion transactions related to the storm period.

If the high court approves, the strands of this giant ball would get unraveled or unwinded. It could mean that the more than $2 billion in electricity-related bonds would be paid off now, rather than in 20 or 30 years.

Electricity companies and co-ops, which in most cases are passing the bond repayments on to us via our monthly bills, could halt that new practice of charging storm fees.

That the court case has gone this far is something of a miracle. With two of the nine justices not hearing the case for reasons unknown, it takes a minimum of a 4-3 vote to make this happen.

Chaos or capitalism?

Chief Justice Hecht and his all-Republican court, face a dilemma. If they vote to leave the giant ball of twine alone, Ed Hirs gets to say “I told you so.” Then it’s hammer and sickle time. The government misbehaved and now it costs us billions.

If the high court votes to untangle the twine, economic chaos could ensue.

Companies that received bailout money could be forced to return the bond money. Those bonds would be paid off decades before due dates. Storm-related add-on charges could disappear from your bills.

Some companies could be forced into bankruptcy because their bailout money has likely been spent.

“That’s what capitalism and free markets are all about,” Ed says.

Predictions

Austin-based energy expert Doug Lewin offers a prediction. He says the high court will try to get it going both ways. The court could rule that the PUC overstepped its authority and tsk-tsk, don’t do it again. Meanwhile, electric companies could be awarded a judgment, but it could be, symbolically, a dollar.

My prediction is that Hecht’s court will punt on this. Hecht will rule that this matter is the responsibility of legislatures and regulators, not the court. He’s taken that way out before.

A ruling is expected by June 30.

Am I confident that this corruption we watched in real time will ultimately be fixed?

Nyet.

Become a citizen of Watchdog Nation.

Join Dave Lieber and learn to be a super-consumer.

Watchdog newsletter: Sign up for The Watchdog’s FREE weekly newsletter to keep up: click here.

Subscribe: PLEASE support The Watchdog’s brand of straightforward journalism designed to save you time, money and aggravation. Treat yourself to a digital subscription (and make him look good!) by visiting https://dallasnews.com/subscribe

Watchdog Home Page: You can’t afford to miss The Watchdog’s two reports each week. Follow our latest reporting always at The Watchdog home page which features all recent columns.

Watch this free training video from Dave: https://youtu.be/uhUEUCNKGjc

Facebook: Connect with The Watchdog on our Facebook group. Search for “DallasNews Watchdog Posse.”

The Dallas Morning News Watchdog column is the 2019 winner of the top prize for column writing from the National Society of Newspaper Columnists. The contest judge called his winning entries “models of suspenseful storytelling and public service.”

Read his winning columns:

* Helping the widow of Officer J.D. Tippit, the Dallas police officer killed by Lee Harvey Oswald, get buried beside her late husband

* Helping a waitress who was harmed by an unscrupulous used car dealer

©2024 The Dallas Morning News. Visit dallasnews.com. Distributed by Tribune Content Agency, LLC.