A special interest group behind a controversial proposal to deregulate Florida’s energy utilities is working hard to breathe new life into the flagging campaign to put the measure on the November 2020 ballot. If approved by Florida voters, household utility customers will lose the option to purchase electricity from their current provider, and will be forced to choose new suppliers for electricity on the open market.
In recent weeks, the group behind the campaign, Citizens for Energy Choices, has pushed a messaging strategy touting the so-called “Texas model,” which they claim is something Florida should strive to emulate. But Texas adopted a deregulation scheme almost two decades ago, and that state has been plagued with problems ever since – ranging from a massive and likely unrecoverable surge in household electricity costs, to a spike in consumer complaints.
That’s bad enough. But in May, just around the time that Citizens for Energy Choices starting amping up their “Texas model” messaging strategy through a series of opinion editorials in newspapers across Florida, energy markets in Texas suffered a significant technical glitch that sent energy costs through the roof, and exposed how easily the Texas model can be manipulated at the expense of utility customers:
The error was inadvertent, an unknowing mistake by an IT worker, and was corrected in three minutes. But within those moments, the price of electricity on Texas’ wholesale market soared from about $40 a megawatt hour to $9,000.
The episode, which generated an immediate windfall of $18 million for power companies and tens of millions more from futures contracts priced higher as a result, illustrates how vulnerable the electricity market in Texas is to manipulation.
Eighteen million dollars sounds like a lot of money to lose, but in the black hole that has become Texas’s energy market since deregulation, it’s literally a drop in the bucket. Two decades earlier, immediately after Texas adopted its deregulation model, household energy costs spiked to record levels, in a state which had previously enjoyed relatively low prices. The spike was so bad, it sent costs far above the national average, too. And those high prices for deregulated energy lingered for more than fifteen years and racked up billions of dollars in lost savings for everyday Texas households.
In spite of the poor performance in Texas, the backers of Citizens for Energy Choices aren’t going to simply throw up their hands and give up. After all, if they can just get voters to ignore these facts and vote for clever messaging instead, the group’s natural gas executive backers stand to rake in millions of dollars in profit. To that end, the group’s executive director, Alex Patton, has embarked on a relentless tour de force of dishonesty, aided and abetted by a handful of newspapers across the state, who publish his opinion pieces even though they contain an easily disproved claim about the efficacy of the “Texas Model.”
In April, Patton published an opinion piece in the Tallahassee Democrat:
When Texas did this 20 years ago, their citizens soon realized lower costs in restructured markets and increased alternative energy production.
This is just false. Texans have NEVER realized “lower costs from restructured energy markets.” Texas households in deregulated areas have actually paid at least an extra $25 billion (yes, billion, with a “b”) for energy since 2001, far more than they would have paid if they’d only kept their existing utility structure – the same thing that Florida currently has in place.
A full decade after deregulation in Texas, the Houston Chronicle pulled no punches in a takedown of the so-called “Texas model:”
A decade of electricity deregulation in Texas has driven up the pay of investor-owned utilities’ chief executives, but it has not fulfilled promises to produce the nation’s most reliable and cheapest power. In fact, deregulation has had the unintended consequence of discouraging the building of new power plants, leaving the state’s power supplies vulnerable as Texas continues to grow.
Over the same period, municipally owned utilities such as Austin Energy and San Antonio’s CPS Energy have shown they can outperform the for-profit companies on reliability while paying their CEOs far less.
That article was written in 2011. Yet prices for deregulated energy in Texas households stayed far above regulated energy costs for several more years under the “Texas model,” adding even more losses to the ledger for Texas households. Data for more recent years has started to show that energy prices across Texas, in both regulated and deregulated markets, are getting more competitive, but it’s a case of too little, too late. Prices in deregulated markets would have to fall far below regulated market prices, and stay well below that point, for at least twenty years just to make up for the $25 billion+ in lost savings since 2001.
To be fair, not everything Patton says about the Texas model is untrue. Here’s a few claims he’s made that are factual, but they require a bit of context:
In 1999, Texas restructured its energy market in way that has been praised by experts as the most successful model in the United States.
CONTEXT: It’s far more accurate to call Texas the “least unsuccessful model in the United States.” It’s easy to be the “most successful” model in the United States when no other states have ever succeeded with deregulation. And that’s exactly the case. Texans have lost billions thanks to deregulation. But every other state that has tried has had it even worse, with surging costs, spikes in consumer complaints, and some states, like Illinois, scrambling to roll back their failed schemes. Across Illinois, hundreds of local governments have opted to move in and attempt to reregulate energy generation and pricing in direct response to out-of-control energy prices that rise and fall with unpredictable wholesale prices.
…Texas is now a national leader in renewable energy. All because of a restructured market.
CONTEXT: Renewable energy growth has nothing to do with deregulation, and everything to do with advancements in wind energy generation, a natural asset in Texas, and one that isn’t practical for Florida. Meanwhile, Florida’s regulated energy markets have produced more renewable energy through solar than Texas, despite Texas having three times as much land mass. Different types of renewables flourish in different areas.
The Florida Energy Choice amendment copies the Texas model.
CONTEXT: True indeed. And that is not a good thing, as this story has shown, and this graph illustrates:
As the 2020 campaign season continues to build, Florida voters are likely to hear more and more rhetoric about the “Texas model.” If they aren’t also talking about the Texas-sized spike in energy prices as a result, they aren’t being honest about it.