08-B CAPP endorsing certain legislative changes

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Important Policy Issue for 80th Legislative Session: Texas Cities Seek Savings in Electric Bills for Their Citizens With Opt-out Aggregation Over the past five years, more than 90 Texas municipalities have saved money on their electric bills by combining their electric needs for volume discounts in the electric market. The $80 million dollars saved by these municipalities is a direct result of a provision in the state's deregulation legislation allowing Texas municipalities to join together and aggregate their electric purchases. Unfortunately, the same opportunity for savings through aggregation is not easily available to citizens. Cities' aggregation has been limited to the energy used to power city-operated facilities such as water pumps and traffic lights. Current law specifies that the city can pool the power needs of its citizens and purchase power on their behalf only if each citizen affirmatively chooses to be part of the aggregation group (known as opt-in aggregation) . As experience has shown, that is an unrealistic expectation. Consumers will not sign up for aggregation until they know how much they will save. And no Retail Electric Provider can tell how much money will be saved unless/until it has a reliable estimate of the number of customers who will be part of the aggregation gr<;mp. Opt-out aggregation for citizens has worked in other states and will work to bring savings to Texans. To provide Texas consumers the same savings that their municipal governments have secured for themselves, CAPP* urges the Legislature to amend current law to allow ratepayers to aggregate their demand and gain negotiating power for electric rates, unless they choose to opt-out of the aggregation program. That action still will permit every citizen freedom of choice whether to participate and will fulfill the promise of citizen aggregation as originally envisioned by the legislation. *Cities Aggregation Power Project (CAPP) is a political subdivision corporation and registered aggregator for its almost 100 member cities and utility districts, all of whom are located in the areas of Texas that are open to retail electric competition. CAPP's members are concerned about the effect of rising energy costs on their own budgets as commercial consumers, but are also troubled by the prospect that Texas's increasingly expensive electric rates may compel large energy consumers to locate their businesses in other states or countries, taking with them needed jobs, tax revenue, and the potential for further economic development.