Could fixed-rates electricity contracts change?

By Amy Davis - Reporter/Consumer Expert

HOUSTON - A recent vote by the Public Utility Commission of Texas in Austin could cause your electric bill to spike during the hottest days of summer, even if you signed up for a fixed rate with your electric company.

The decision has some consumers, like Clear Lake's John Cobarruvias, frustrated and concerned. Like many Texans, he locked in a rate so he could avoid big price fluctuations on his electric bill.

"I wanted to have a little certainty over the next year," said Cobarruvias.

Fixed-rate contracts are intended to insure your rate won't budge until the contract expires. But, several electric providers have indicated they believe the recent PUC vote gives them the right to change fixed rates mid-contract.

"The possibility is there," said Cobarruvias. "And if the possibility is there, I bet they're going to do it."

KPRC Local 2 investigator Amy Davis met with the chair of the Public Utility Commission of Texas to ask why the agency is not doing more to protect consumers from extreme price increases.

"Will you allow electric companies to raise those rates?" Davis asked chair Donna Nelson.

"What I am telling you is I don't think they will do it," answered Nelson.

But that answer is not good enough for consumer advocate Carol Biedrzycki of Texas Ratepayers Organization to Save Energy.

"The PUC should, at this point, put its fist down and say, 'No way. Fixed price-contracts are fixed price. You honor them,'" Biedrzycki said.

The PUC vote raised the amount power generation companies can charge electric providers, like TXU and Reliant, when power is in short supply. Before Aug. 1st, the maximum amount power generators could charge was $3,000 per megawatt of electricity. Now, that amount has increased 50 percent to $4,500 for the same amount of power.

"We're trying to make sure the lights stay on," Nelson explained.

Commissioners said allowing generators to charge more will encourage them to build more plants in Texas. More plants mean more power and fewer days like the one in February 2011, when there were state-mandated rolling outages because there wasn't enough electricity to go around.

"The last thing we want to do is break a promise to our customers," said Reliant's Pat Hammond.

She admitted the change in price has some electric companies concerned about how they'll make up for the cost increase. More importantly, will consumers have to foot that bill?

"We believe that a promise is a promise," she said. "We have no intention of changing our price to our customers who are on fixed-price contracts."

But off camera, Local 2 Investigates discovered several electric companies making the case to the PUC about why they should be allowed to raise your rate on fixed-rate contracts. Commissioners have yet to say whether those increases would be legal.

"If a customer has a rate that's changed, they can come to the PUC and we will look at it," Nelson told Davis.

"Consumers are going to hear you say, 'We're going to wait until it happens before we address the issue.' What is the PUC waiting for?" Davis asked.

"We have to wait until the facts are in front of us before we make decisions," she answered.

TXU, Green Mountain and Reliant have all told Local 2 Investigates they believe they can legally change fixed rates because of the PUC price cap increase, but all said they don't plan to do that. As for how high your rate would go if electric providers do raise rates, that is anyone's guess.

"So we'll just wait and see?" Davis asked Nelson.

"Well, I mean, that's all we can do," she replied.

Electric companies are not paying the $4,500 rate every day. The price will only hit that level on high-demand days. Last year, rates hit the cap on 33 days. The PUC said 2011 was an extraordinarily hot summer.

After our interview, the PUC told Local 2 Investigates that three power generation companies have announced they're building new plants or expanding existing ones. The chair said those decisions are directly related to the price cap increase.

If you have a news tip or question for KPRC Local 2 Investigates, drop them an e-mail or call their tipline at (713) 223-TIPS (8477). Copyright 2012 by All rights reserved. This material may not be published, broadcast, rewritten or redistributed.