Wednesday, Jul. 23, 2008

Electric customers blame CM, Utility Board

By Terry Evans

tevans@star-telegram.com

Some customers who spoke Friday to the Weatherford Municipal Utility Board demanded the immediate dismissal of City Manager Jennifer Fadden, Board Chairman Ronnie Warren and Place 6 board member Paul Phillips.

Others threatened a recall election to replace the entire Weatherford City Council and, ultimately, the Board.

More than 150 people sat in rows of chairs that overflowed into City Hall’s foyer. Still more lined the walls of the council chamber. Those walls vibrated with applause as one speaker after another protested the latest electric bills they’ve received.

Speakers who demanded various dismissals received standing ovations.

Emotions were raw as speakers cited circumstances that cause them, members of their families or neighbors on fixed incomes to choose between buying food and medicines, or paying electric bills.

Darla Schrader of Weatherford Housing Authority was in tears as she spoke on behalf of 530 families she represented at Friday’s meeting.

"A lot of people call me and say they can’t pay their electric bills," she said. "If they can’t pay, they’ll get kicked out of housing, because we can’t assist people with a house that has no electricity."

Schrader asked the board members what they recommend be done with families that might well find themselves without homes.

"There are no shelters in Weatherford," she said. "Where are they going to go? Please, do something for these families."

Jerry Clinton called the situation a disaster and blamed the board in general, and Fadden specifically, for causing it.

He said that people on fixed incomes are crying because they can’t pay their electric bills.

"These are the guys who elected you," Clinton said, addressing three board members who also are on the City Council, "and you let them down. For 20 years we’ve built this economy, and with one swoop of a pen, Ms. Fadden, you changed this with that contract."

The contract Clinton referred to is the latest one negotiated by Fadden and her staff with wholesale power provider American Electric Power (AEP).

Utility Director Sharon Hayes and Chief Financial Officer Janina Jewell explained events that led to the renegotiated contract that resulted in a spike that raised electric bills by 32 percent.

Weatherford Electric contracted with AEP in the fall of 2007 to shift away from a market rate based on natural gas. Hayes said that AEP was the only supplier whose offer included coal-generated power, which the staff believed would give rates more stability.

She said that no one saw coming an issue related to wind-generated electricity in West Texas: a congestion charge added to WE’s wholesale energy costs. The power lines transmitting electricity from the coal-powered plant also are being used to transmit electricity from wind-generating farms.

The congestion charges, Hayes said, exceeded what Weatherford was saving by using the coal-powered plant. In the first five months of 2008, those charges amounted to $1.3 million. In May, Weatherford contracted to use a purely natural-gas-powered supplier.

A 90 percent increase in the cost of that fuel source caused the spike in WE bills.

Mayor Dennis Hooks said he doesn’t blame Fadden or anyone on the board.

"I don’t know that I blame the board or the staff for the situation we’re in," he said. "I’m not convinced that we didn’t take the best contract we had available to us at the time. I’m not convinced that we did, either."

Hooks said he participated in the contract process, and was surprised by the outcome.

"If we knew then that the gas rates were going up so far we could have warned the citizens," he said. "I don’t know if they would have heard and believed it, but at least we could have given them warning."

Fadden said that the city is investigating options for helping its customers.

"We heard from our community today and we are listening," she said Friday. "We will begin identifying immediate changes we can make that will impact rates. We’re also studying long-term solutions. I believe there are immediate changes that can be made to the city’s budget that will allow us to reduce costs to our customers. While there will not be monumental savings, in this situation every little bit will help."

Speakers Friday also expressed outrage that, with few exceptions, Weatherford Electric customers are not allowed to take their business elsewhere.

State Rep. Phil King counts himself among those few exceptions, and sent a letter to the board (read by his chief of staff, Mattie Pearson) recommending a change in the policy.

"...I live in the City of Weatherford but in a small section where customers are allowed to choose among different electric providers," King wrote. "My electric rate is currently locked in at 11.6 cents per kilowatt hour – a rate which is substantially lower than the rate now offered by the City of Weatherford."

Fadden said that July’s Weatherford Electric rate is 19.9 cents per kilowatt hour.

King encouraged the City Council and Weatherford Utility Board to consider opting-in to the competitive market.

"I believe the market has changed and that competition now offers lower prices for Weatherford residents," he wrote. "Should you decide to take this path, I will do my best to ensure that the Public Utility Commission and ERCOT work to expedite the transition of Weatherford into competition."

The city’s position, as Fadden explained in a column in the July 16 Weatherford Telegram, is that Weatherford has not opted-in because the decision is irreversible and there are significant financial implications for taxpayers. She pointed out that no other municipally owned utilities in Texas have opted-in.

Weatherford Electric bills its customers based on the price of energy, and when that price declines, so will customers’ bills, Fadden wrote.

Hayes brought those facts up in the meeting. However, she added that all options are on the table.

Warren asked Hayes if such providers as TXU and Tri-County will raise their rates as high as Weatherford Electric’s has gone.

Hayes said she and her staff heard that TXU is increasing its rates to about 18.8 cents.

"So really, we’re just ahead of the curve?" Warren asked. "If gas prices fall our rates will fall?"

Hayes assured him that was so.

Hooks said he’s been wondering how one of the possible alternative providers, Tri-County Electric, is so much cheaper (just over 12 cents per kwh in June) than Weatherford.

"That’s one of the things we’re going to find out," he said. "A year ago we were the cheapest in the area and now we’re the highest, with the same supplier and same basic contract. How did we get there? I feel that we’re doing business with a company that will work with us on the best scenario we can come up with for our cost of power."

Hooks added that he regrets that the city didn’t act earlier.

"I’m sorry we didn’t try to alleviate some of the increases before last Friday," he said.

Terry Evans, 817-594-5969