Oncor Wants More
Completely unashamed by the optics, Oncor has requested a rate hike with a total statewide price tag of $98 million. The move follows a crippling winter storm in February that caused massive power outages and left as many as 4 million Texans in the dark at some point. At least 151 people died, according to the Texas Department of State Health Services.
Three people in Tarrant County were part of the death toll. Some of the Texans who lost their lives literally froze to death as their power went out for days or longer as historic single-digit and below-zero temperatures swept across the state. As a result, lawsuits are underway.
Those of us fortunate enough to have electricity for the entire storm sat in fear that the lights would snap off at any moment.
The debacle was described as the worst power outage in Texas history, an event that has drawn scrutiny from the U.S. House Committee on Oversight and Reform and the Senate Energy and Natural Resources committee.
Across North Texas, various city councils, including Fort Worth’s, have ceremoniously rejected Oncor’s rate hike request, as they typically do every year. Oncor annually files for a so-called Distribution Cost Recovery Factor (DCRF) to cover costs.
City-hired attorneys and consultants are on standby and ready to work to block the utility company’s rate increase, if needed. In a resolution, Fort Worth City Council called Oncor’s rate increase “unreasonable.” When contacted to elaborate, the city stated in an email that it had no official response at this time.
Meanwhile, Oncor representatives have been making the rounds at area city council meetings, giving their “we had to drop a load” speech because they were told to by the Electric Reliability Council of Texas (ERCOT), an entity that operates the electric grid and manages the deregulated market for 75% of Texas. Oncor has reiterated that it is just the deliverer of electricity, not the seller. Anyone following along since February has already heard the explanation that leaving the state’s overtaxed electrical grid going full steam during the storm would have caused a complete blackout, something that would have taken weeks or months to repair.
But cities have faced backlash from residents who were angry about announcements of “rolling” blackouts only to go without power for days while their neighbors did not suffer the same fate. On social media, people complained about the Dallas and Fort Worth skylines, and TCU’s campus, being lit up like Las Vegas.
How exactly neighborhoods are chosen for an outage and the timing of it is “proprietary information,” according to Oncor.
City councils have publicly asked tough questions of Oncor’s reps, at times questioning the logic of the utility company’s defense. Would a new and nifty app improve communication during a severe storm? Sound the buzzer. Not if cell towers are down during an outage.
Does Oncor’s rate increase stand a chance? It could. The Texas Public Utilities Commission makes the final decision, and that is expected to happen sometime in late July or early August.
This is the same agency that touts the ability of Texans to choose from either fixed rate or variable plans. Built into the commission’s wording about electricity plans is the following: “If you choose a plan with a fixed rate, your price per kWh will not change during your contract period except for changes in Transmission and Distribution fees, changes in ERCOT, the Texas electric grid, or Texas Regional Entity administrative fees, or changes resulting from federal, state or local laws that impose fees beyond your REP’s control. This may help your household budgeting, but if market prices fall you may have to wait until your contract ends to enjoy a lower price.”
Following the storm, a public outcry echoed across the state when some customers on variable plans were hit with astronomical bills reaching into the hundreds and in some cases thousands of dollars. Some customers who had automatic payment withdrawals set up with Griddy Energy had their bank accounts emptied. One family received a whopping $10,000 electric bill.
Texas Attorney General Ken Paxton ordered Griddy, one of the biggest offenders, to cancel more than $29 million in charges, and the company went bankrupt.
Oncor, however, isn’t doing too bad. In a three-month period that ended March 31, 2021, the $2.2 billion company reported a net income of $168 million, compared to net income of $131 million in the first quarter of 2020.
Still, Oncor said in a rambling May 5 press release that the rate increase it is seeking has nothing to do with the storm. Its investments to serve distribution customers counts as of the end of 2020. Oncor is talking specifically about the $860 million it dumped into new investments in that time period.
In an email response, Oncor stated part of the money was used for transformers, capacitors, and meters required to meet load growth requirements. Other work included replacing and upgrading substation and distribution facilities. Additionally, computer hardware and software were updated.
As far as the storm goes, Oncor points to costs of “approximately $90 million in operation and maintenance restoration costs.”
As with any major storm, Oncor said, they will “seek recovery of these costs in a future rate proceeding.”
In addition, Oncor “incurred approximately $12 million in capital expenditures and will seek recovery of these capital expenditures in future tracker filings.”
That means that while Oncor isn’t blaming the storm for rate increases now, it will be blaming it for them soon.
Additionally, some electrical providers have filed for bankruptcy or transitioned customers to other providers. Oncor has deemed that charges it is owed from these companies are uncollectible and will be recovered through another “future rate proceeding.”
So now we come to the real question. How much will the current rate increase cost on the average electric bill? A typical residential customer, using 1,300 kWh per month, will see an increase of $1.35 per month. That represents a 2.8% increase over current Oncor delivery, or “wires,” charges, according to the company.
Oncor is not solely responsible for everything that happened during the storm, and the company has been apologetic and is filled with promises of better communication with customers. According to its website, Oncor’s role is “ensuring Texans have safe, reliable energy when and where they need it.”
The company also notes it works closely with the Public Utility Commission and ERCOT to determine needs and make sure our energy infrastructure keeps pace with capacity.
Ultimately, Texas residents and businesses will be asked to pay for the overall lack of preparation and the handling of the storm emergency. Since February, the public has heard little if any details of the exact improvements that are being made. Given the overall optics, maybe even a penny increase would be, as the city called it, “unreasonable.” l
The Weekly welcomes all manner of political submissions. They will be edited for clarity and factuality. Please email Editor Anthony Mariani at email@example.com.