AUSTIN, Texas – May 2, 2018 — Yesterday, the Texas Senate Committee on Business & Commerce held a hearing to investigate whether consumers in Texas are better served through competition in electric service. The testimony provided will help the legislature understand the impact of competitive versus noncompetitive retail markets across the state in terms of price and reliability. Information shared at the hearing will assist the legislature in setting future policies regarding the state’s electricity market.
Edward Henigin, Data Foundry’s CTO, was invited to testify by the committee on Data Foundry’s battle with Austin Energy’s non-competitive business practices that cost Austin Energy ratepayers hundreds of millions a year.
Austin Energy is both a service provider and a generator of electricity; however, the power they generate does not directly serve the Austin market. According to Austin Energy’s 2015 Cost of Service Study and Proposal to Change Base Rates, their owned and contracted power plants do not serve Austin Energy customers directly. Instead, this electricity is sold wholesale to ERCOT, the grid, at a loss.
“Generation is totally unnecessary for Austin Energy to provide service to its subscribers. We have established, and Austin Energy agrees, that 100% of the power consumed by its customers is purchased from third parties,” says Henigin.
Some Austin companies have come to the realization that Austin Energy loses money generating electricity for the wholesale market. Data Foundry discovered Austin Energy loses approximately $300 million a year in generation costs. To compensate, they cross-subsidize, charging their retail customers higher rates. Because Austin Energy is a monopoly, customers are forced to pay these rates. “The practice of cross-subsidization is anti-competitive and illegal,” says Henigin.
Data Foundry has long supported free and open market policies, especially when it comes to the Internet. The company feels the same about electricity and will continue to fight anti-competitive practices in the Austin market.
