Seeking lower electricity rates, residents in two East Texas towns hope the state will intervene

Residents in two East Texas towns hope a state regulatory board will step in to help lower electricity rates. (Credit: Michael Gonzalez/The Texas Tribune)

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Linda Berry loves a lot of things about Livingston: her neighbors, the quaint downtown and the picturesque woods. But she’s no longer sure those perks are worth the cost of the utility bill she pays each month.

“When you look at the rate they are charging us, it’s insane,” Berry said. “The economy here does not justify what you’re paying.”

Berry, who is 60 and lives alone in a two-bedroom, two-bathroom home, lost her job this summer and worries she doesn’t have enough savings to retire. The $400 — or more — she is charged each month for utilities is not helping.

Now, Berry and more than 300 residents of Livingston — a roughly 6,000 person town in Polk County, about 75 miles northeast of Houston — have filed a petition with the state Public Utility Commission, asking the state agency to review the East Texas town’s electric rates. The petitioners say those rates are set without regard to the cost of service and that customers are overcharged.

A similar complaint has been filed by residents in and around Jasper, another East Texas town. They argue that Jasper’s electric rates are both unjust and set without transparency. The petitioners in the two towns also argue that the cities have kept residents in the dark about millions of dollars transferred from the utilities to the cities’ general funds. Residents say that money should go back to customers.

“Where is all of that extra money going?” Berry said. “The city is putting in a pickleball court. I don’t care about a pickleball court. I want my light bill lowered.”

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The utility rates charged by Livingston and Jasper are comparable to rates around the state. Livingston was charging 14.75 cents per kilowatt-hour until they lowered the rate to 11.75 cents in September. Jasper’s rate is about 9 cents per kilowatt-hour, according to customers — the city did not immediately provide the rate upon request. The average rate in Texas is about 14 cents per kilowatt-hour, according to the U.S. Energy Information Administration.

The customers say the way to determine whether rates are fair is not by comparison, but by assessing how the rates are set. Joshua Grant, a Livingston resident who founded Citizens of Livingston for Fair and Equitable Rates, said the city sets rates arbitrarily without regard to their costs.

“There is no published breakdown of rates, and the process for determining and setting rates is unknown,” Grant said. “That’s part of our issue against the city.”

For the East Texas residents to see lower rates, they must first convince a state administrative court that the PUC has jurisdiction. The vast majority of the state gets its power through a deregulated market, meaning Texans get to select their electricity provider from a number of options. The PUC regulates that market, resolving consumer complaints and ensuring providers are compliant with state laws.

But municipally-owned utilities, like the ones in Jasper and Livingston, are excluded from state regulation. Lawmakers reasoned that local decision makers, whether a city council or the elected board, should make rate decisions, not far off lawmakers in Austin. That leaves about 5.1 million Texans, or about 15% of the state’s population, outside of the PUC’s purview.

Livingston and Jasper, as well as Liberty — a third town that is not contesting its rates — operate under the Sam Rayburn Municipal Power Agency, which is run by a board of directors consisting of elected leaders from each of the constituent cities.

Attorneys for the petitioners contend that residents who get their power through public utilities can still appeal those rates to the PUC. Their argument hinges on an interpretation of a subsection in the Public Utilities Regulatory Act.

“To deny a large group of customers the opportunity to have the commission look at their rates is a problem,” said James Brazell, the attorney representing the petitioners. “The commission is the agency that knows how to set rates correctly and properly. The city is not an expert rate setter.”

If the state office of administrative hearings determines that the PUC has jurisdiction to hear these cases, that could open the door to a slew of other rate setting cases of municipally-owned utilities.

Livingston has filed a motion to dismiss the petition, arguing that the commission does not have jurisdiction. The city argues that if customers have an issue with their rates, they can appeal through the ballot, by electing new city council members who determine rates. Jasper has meanwhile agreed to hold settlement discussions.

This isn’t the first time residents sued a municipal utility for better rates.

In 2012, residents who were served by Austin Energy but lived outside of Austin city limits contested their rates with the PUC. They ultimately settled with Austin Energy, receiving a discount on electric rates. A similar result could come of the case filed by residents outside of Jasper.

“The idea is that you can control through your vote who is on the board of directors,” said Beth Garza, a senior fellow at R Street, a policy think tank. “When the utility serves people outside of the city limits, those customers can appeal to the PUC.”

Municipally-owned utilities can enter into long-term purchase power contracts to generate new sources of power. The Sam Rayburn agency in East Texas entered into such a contract in 2010 and has given Jasper more than $45 million in distributions and Livingston more than $52 million in distributions, according to Bruce Mintz, executive director for the Sam Rayburn agency. That funding is another point of contention for residents who want to see that money back in their pockets.

In Jasper, Anderson Land was elected mayor in May after running on a platform to reduce utility rates for residents. Land has faced significant opposition from council members who want to use that money to fund infrastructure projects or entertainment in a town with few economic opportunities. Land scored a political victory over the summer when he passed a measure to use $1 million to reduce electric rates for the months of August and February, the hottest and coldest months of the year.

Livingston has not passed a similar measure, but the town does not charge property taxes and relies heavily on electric payments to fund the city.

State lawmakers this year introduced a bill that would prohibit cities from transferring revenue from a municipal utility to the city’s general fund if the transfer would result in a deficit for the utility or a rate increase for customers. Officials from San Antonio and Austin — which run municipally-owned utilities — both testified against the bill, which was left pending in committee.

For now, Livingston and Jasper residents are stuck with the current utility rate. Nearby, the Sam Houston Electric Coop, which serves customers outside of Livingston city limits, charges 10.54 cents per kilowatt-hour.

“We are getting ripped off,” Berry said. “If my light bill would go down $100 to $200, my life would be good.”