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Non-Profit Partners
University of Houston
KPFT 90.1-FM
HMS Cable-Access Ch. 17
FACT SHEET / KEY STATS
1973: South Texas (nuclear electric) Project approved by
PUC.
1978 : Projected initial startup @ approximately $570
million cost by HL&P
Aug. 1988 & June 1989 : Actual initial startup @ $4.561
billion in book value of actual costs
10 years behind schedule and 800 percent over budget
repeated shutdowns for leakage and for failed safety
inspections
12,200 acre site on Colorado River, 90 miles downwind of Houston,
southwest near Bay City.
14,175 megawatts twin reactors
1996 : First nuclear plant in Texas
Largest two nuke reactors in U.S.
Two of top 20 nuke electric generating units worldwide
1999 : Texas Electric Choice Act - passed by voice vote
in state House and Senate. No record of votes.
"Deregulates" electricity and sweetheart deal to bailout "phantom"
stranded costs.
Big 3 nuke operators blocked deregulation until legislators agreed
to foist "stranded costs" on consumers. Liability of a bad business
decision shifted to 1.8 million ratepayers.
Reliant Energy splits into deregulated Reliant Resources and
PUC-regulated CenterPoint Energy.
Reliant Option Agreement" gives Reliance right of first refusal to buy
back CenterPoint assets. Shows "intent" to bundle CenterPoint with
liabilities to sustain its claim to "stranded costs" and then buy it
back after the windfall "true up."
2001 House Bill 2107 - defeated by recorded vote.
Would force nuclear utilities to return any stranded-cost
overcharges to ratepayers.
Co-sponsors: Rep. Sylvester Turner, D-Houston;
Kevin Bailey, D-Houston and John
Longoria, D-San Antonio.
Primary opponent Rep. Steve Wolens, original sponsor of 1999
law.
Supported by conservative Democrats and all Republicans
April 2004 : Big 3 file "true up" for balance of
"stranded costs."
Central Point Energy: ratepayers owe $4.4 billion
= $3.794 billion invested + $631 million interest
Mayor Bill White: ratepayers owe $2.2 billion
Texas Consumer Advocate: ratepayers owe nothing.
2003 : Texas Supreme Court case pending to recoup
stranded costs
June-July 2004 : PUC hearings for 3 weeks on stranded
costs in Austin. Decision expect in August.
Houston Chronicle does two stories in business section.
Corpus Christi Caller-Times does one story.
Houston TV stations: zero stories.
2004 - 2019 : Ratepaying families will pay an extra $10
per month for 12 years =
Bottom line: $1,440 per family
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corporate upper class / consumer rights
The Public Utilities Commission has been holding secret hearings in Austin for three weeks. At least a fourth of all the filings, testimony and documents in the largest deregulation case in Texas history are being kept secret.
The hearings concern CenterPoint Energy’s claim to recover $4.4 billion in "stranded costs," mostly in investments in the South Texas (nuclear electric) Project, near Bay City, 90 miles downwind from Houston. Of the more than 2000 filings in the case, about 560 are listed as confidential.
The hearings are coming to a close -- probably this week. The PUC is expected to make a decision sometime in late August.
If CenterPoint is awarded all that it is seeking, electricity bills will increase by approximately $10 a month for the next 12 to 15 years – for about 85 percent of Houston households. The PUC ruling will affect 1.8 million ratepayers.
“As to the merits of a stranded costs claim, generally, I see them as industry bailouts, in which the formerly regulated firm is frequently looking to the public [to consumers] to subsidize its private opportunity costs,” said Jim Rossi, who taught Administrative Law at UT when electricity was deregulated in Texas and is now the Associate Dean for Research at Florida State University College of Law.
According to PUC spokesperson Terry Hadley, the hearings were web cast over the Internet and open to the public. However, the camera was turned off and the room was cleared [except for the involved parties] to hear specific confidential information.
The confidential filings are being used as evidence in the case, and all the parties directly involved in the case have access to the filings. Directly involved parties must sign a confidentiality agreement before being given access, Hadley said.
The PUC’s director of the electric division Jess Totten said that there is no hearing beforehand to decide if something is confidential. A company – in this case CenterPoint can declare anything from executive salaries to company picnic menus as confidential if they so choose.
“If they [CenterPoint] believe it’s confidential they have the ability to file it as a confidential document,” said Totten. “If other parties in the case want access to that information then they have to sign an affidavit that they won’t release it [the information] outside the context of this case.”
The other parties in the case have the ability to challenge a confidential designation, Totten said, but “typically the parties are more interested in getting access to the information so they can use it in presenting their case than they are in challenging whether a particular piece of information is really confidential. There is a process for challenging, but it is not often invoked.”
On the rare occasion when a confidential filing is challenged the PUC is the body that decides what is and is not confidential. Apparently, the PUC has ruled that the general public is not "directly involved."
“These are filings in rate cases that are considered proprietary. [They're filings] that can remain confidential and that are provided to the commission for a specific case,” said Hadley. “The filings are kept confidential for proprietary reasons.”
One of the most important secret documents is the one that is being used to calculate how much ratepayers are supposed to owe the utility company. The Texas PUC used a computer model or projection, called an excess-cost-over-market model or "ECOM model," to estimate stranded costs related to the plant assets at STP, according to the 2002 report by CenterPoint filed with the SEC. That model is now considered confidential.
Totten said that he didn’t know the exact information of the ECOM model or why it was designated as confidential.
The titles of all of the filings in the case are listed at http://interchange.puc.state.tx.us/webapp/interchange/. Click “login” and type “29526” in the control number field.
The titles of the confidential filings include such items as testimony by Reliant/CenterPoint Energy employees, general instructions, responses to requests for information and the ECOM model.
Legal scholars and consumer advocates have questioned the validity of the confidential filings. Texas is an open-records and an open-meetings state. The Texas Public Information Act, revised 1995, begins: “It is the policy of this state that each person is entitled, unless otherwise expressly provided by law, at all times to complete information about the affairs of government and the official acts of public officials and employees. The people, in delegating authority, do not give their public servants the right to decide what is good for the people to know and what is not good for them to know.”
The PUC has a "Compact With Texans" that states it will “protect utility customers.” The PUC promises to “give you clear, accurate and consistent information.” In this case, the PUC appears to be doing neither.
“I understand that there is a certain amount of frustration with the process,” Totten said. “But the [Texas] Public Information Act does protect from disclosure competitively sensitive information. The commission has an obligation to release information under the act, but we also observe the exceptions to it.”
The main argument for confidentiality here is a false one, according to Rossi, who holds an endowed chair as the Harry M. Walborsky Professor at FSU and has published numerous articles dealing with “stranded costs” including one in the Texas Law Review, Volume 77, Issue 1, 1998.
“There is a problem with applying a business or proprietary privilege here: If the firm claims privilege in a proceeding that is evaluating costs and risks it incurred as a monopolist, no competition applies to these decisions,” Rossi said. “If, on the other hand, the firm is claiming compensation for costs and risks it incurred after competition came to the industry, then these costs are not appropriate for compensation in a stranded cost case. If they were, the public (here consumers) would be asked to compensate the firm for private risks and opportunity costs.”
In other words, the old Reliant Energy and its news successor companies (CenterPoint, Texas GenCo and Reliant Resources) were all the same company when these investments were made – a regulated monopoly. Regulated electricity providers have no competition in their marketplace.
Therefore, according to Rossi, competitive advantage does not apply and documents about investments that occurred in the distant past cannot be considered confidential.
Similarly, documents and testimony concerning a de-regulated company that was created less than two years ago should have no bearing on investments made by a regulated company that pre-dated the new company.
Totten said that the period of time when the generation assets were in a competitive market, specifically in 2002 and 2003, was used to set the valuation for the stranded costs, but the assets were obtained earlier.
“I think what you say about the investments having been made at a time when HL&P, Reliant or Centerpoint were regulated, that is certainly true,” said Totten.
Although competitive advantage shouldn’t apply to this case, law professors at the University of Houston said that CenterPoint may be claiming secrecy to withhold information.
Many of the confidential filings have produced requests for information from the opposing parties in the case. The City of Houston has made 42 official requests for information. The Houston Council for Health and Education has made 16 requests, and at least 30 parties aligned against CenterPoint have all filed RFIs.
The withholding of information is a classic strategy used by litigators because it “takes so long to challenge them,” said Clarence Johnson, director of regulatory analysis for the Office of Public Utility Counsel, one of the opposing parties.
By rule, the PUC must decide the case within 150 days after the initial filing, according to Hadley, so the longer CenterPoint can withhold information, the better. Of course, if a request for information is granted, any information released to the opposing parties is held confidential from the public thanks to the non-disclosure agreement the filing parties must sign.
“In my opinion, there ought to be some bitter with the sweet. If the firm wants a public bailout, it ought to also be able to swallow some public evaluation of its private risk and cost information,” Rossi said.
The public's right to oversight in this case, however, is being censored. The ratepayers are the ones that could be paying – for 12 to 15 years – if CenterPoint is awarded the stranded costs, yet they aren’t allowed the information needed to justify writing the check.
EDITOR'S NOTE:
The $4.4 billion case is being covered by World Internet News and discussed in the Public Forum at http://www.class.uh.edu/winc_forum/forum/default.asp Whatever decision is reached, the case will have financial implications for every Houston family that pays an electric bill for the next 10 years.
© Copyright World Internet News 2006-07
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corporate upper class / consumer rights
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