Politics

Texas Two-Step Corruption

You’re going to pay back $6 billion in storm related bonds. Good luck finding the details

  • By Dave Lieber The Dallas Morning News
  • Dec 11, 2022

I finally found an elected public official who uses tough-guy language to criticize the purchase of billions of dollars in bonds to pay electricity and gas companies for their losses. He speaks of “public corruption” and cites the unfairness of ratepayers picking up the tab from losses incurred during the 2021 February freezeout.

He calls the process “shady,” blasts private bond negotiations and calls out insider dealings that “erode the public trust and, at a bare minimum, need transparency and disclosure. Honest government regulation of public utilities requires nothing less.”

The only problem is this guy is from Oklahoma, not Texas. Bob Anthony is a longtime elected member of Oklahoma’s equivalent of our Public Utility Commission. And unlike our elected leaders and appointed utility regulators, he refuses to roll over.

In Texas, state leaders from the governor on down have approved borrowing $6.3 billion in bonds to make gas and electricity companies whole again after massive losses from the big deadly storm. All of us electricity and gas customers will be paying this back on our monthly bills for up to 30 years.

It’s my contention that instead of borrowing $6.3 billion, the state could dip into the rainy day fund and the projected budget surplus, both of which total $40 billion, rather than hitting us up. But it’s too late now.

If you follow my work as The Watchdog, you know that I’ve been obsessed with trying to find out which companies get how much in bond money.

Finally, in the past weeks, after asking numerous times, I received spreadsheets of data from the Texas Railroad Commission (which regulates gas utilities), the PUC and grid operator ERCOT.

Gas bonds

Let’s start off with the easy one — gas. The Railroad Commission is handling $3.4 billion in bond money, not yet distributed. This set of bonds is called the “Customer Rate Relief Bonds.” How can it be “rate relief” when we’re paying it back? This spin is because rather than getting hit with a one-time fee of thousands of dollars, customers pay out in smaller doses over the next several decades. So “rate relief” is a misnomer.

Eight gas companies are on the list, led by Atmos Energy, slated to receive $2 billion, followed by CenterPoint, which will get $1 billion. Smaller companies will gobble up the rest.

Atmos is also allowed to spend $552,000 for “legal, consulting and professional expenses.” Selling bonds has high overhead. There are fees from underwriters, lawyers, rating agencies and others.

Atmos spokesman Tim Enstice told me: “As a regulated utility, Atmos Energy cannot earn a profit off the natural gas we deliver. We are only allowed to pass through our cost to customers.”

PUC bonds

The PUC provided The Watchdog with a spreadsheet showing where $2.1 billion is going. With the help of Dallas Morning News data analyst Arijit Sen, I can show the top 10 recipients. TXU Energy, by far, leads the way with $409 million, followed by Reliant ($312 million) and Direct Energy ($117 million),

Rounding out the top 10: Gexa Energy ($92 million); Constellation ($91 million); Engie Resources ($82 million); Champion Energy ($81 million); Ambit Texas ($77 million); Discount Power ($75 million); and Green Mountain Energy ($70 million).

I don’t want to leave you with the impression that these are 10 separate companies reaping these awards. They are not. Vistra Energy owns both TXU Energy and Ambit. NRG owns four of the companies in the top 10 — Reliant, Direct, Discount and Green Mountain.

NRG spokesperson Patricia Hammond told me the companies were reimbursed for about 65% of their actual losses. “The remainder of those costs were borne by our investors,” she said, adding that the NRG companies will not be passing bond costs through to residential customers.

The other companies on the list did not return my requests for public comment.

The PUC also referred me to grid operator ERCOT for more bond information. That’s where the problems began.

ERCOT bonds

After much begging on my part, ERCOT gave me a spreadsheet that is obviously not prepared for public consumption. It’s a mess. How are we supposed to know that column AJ in the spreadsheet (labeled “Calculation of Proceeds for Agreement in 52322 is the amount each company is supposed to receive? Skip the jargon and label it with something like Final Payout.

On ERCOT’s spreadsheet, top recipients are Exelon ($91 million), NRG ($518 million), EDF Energy Services ($99 million) and Just Energy ($109 million).

But dealing with ERCOT’s spreadsheet was like trying to catch a greased pig. I kind of lost it.

I wrote to ERCOT spokesperson Trudi Webster that ERCOT’s spreadsheet is “somewhat of a disgrace. It’s a mess. The public is paying for this, and no one could understand it. You can’t tell what company is getting what money because of the jargon. This should be fixed and clearly posted on ERCOT’s website, so the people who are paying the bill can see where the money is going with clarity. I see it as a shameful lack of transparency.”

Webster wrote back: “ERCOT is focused on communicating closely with state leaders, market participants, as well as with the media and general public. Our goal is to maintain clear communications with all stakeholders. The information presented in the spreadsheet supports meeting that goal.”

And that’s when it hit me. You shouldn’t have to be a spreadsheet geek to understand this. Against our will, we are forced to support the purchase of $6 billion in bonds and repay it all by 2050.

The least they can do for you as the borrower is show you the numbers in a way we can understand.

I call on the Railroad Commission, the PUC and ERCOT to clean up their spreadsheets and post them prominently on their website’s front page so all the energy geeks out there, as well as the rest of us, can search and learn.

Right now, the information is hidden. It may be on some web page, but good luck finding it.

It appears that our top leaders do not want us to know the details.

The guy from Oklahoma was right. To maintain the public trust, “transparency and disclosure” are required.

As he put it, “Honest government regulation of public utilities requires nothing less.”

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