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Readers offer questions on TXU assessment
12:00 AM CDT on Thursday, June 28, 2007
On Wednesday, Roger Gale of GF Energy and Dallas Morning News reporters Elizabeth Souder and Randy Lee Loftis chatted with readers on dallasnews.com about the assessment of the proposed TXU buyout that Mr. Gale prepared for The News.
About 30 readers logged on and two dozen posted questions. Several shared the same Internet provider address, although only one identified himself as a TXU employee.
This transcript was edited for brevity, to correct typing errors and group similar topics.
NativeTexan: I don't understand the timing of a report that makes significant regulatory and statutory suggestions after the end of the legislative session. If your intent is serving your readers, why wait this long to make suggestions that no one can act on?
Randy Lee Loftis: The timing was just a function of the time the buyout announcement was made and the complexity of the issues. It took awhile to get the analysis together.
Shawn80: Elizabeth, doesn't a study like this veer wildly into journalistic advocacy? How are we expected to trust the coverage by The Dallas Morning News, with biased reports on current topics? Is there no need for objective journalism?
Elizabeth Souder: We hired a consultant to write an independent report, and we were committed to publishing the results. Further, there is no such thing as absolute objectivity in journalism. Never has been. We can only aspire to be fair, honest and transparent, which has certainly been our approach to this project.
Bsf: The report was panned by a professor from UNT [Dr. Bernard Weinstein of the University of North Texas]. Why won't you reveal the cost of the report?
Elizabeth Souder: Dr. Weinstein sent us an e-mail with his thoughts on the report, which we posted on the Web site. As for revealing costs, we would like to know more financial data behind the buyout plan.
Texfarmbob: I am a longtime TXU employee (25+ yrs) who thinks the company has been a good corporate partner and one of the largest employers in North Texas for many years. Instead of noting how TXU has more than met both state and federal pollution guidelines, The News has continuously bashed the company first for wanting to build power plants and now, per the study, for potential price increases in the future based on demand and tight power resources because more plants are not being built. At this point, TXU can't win. Can you comment?
Randy Lee Loftis: Complying with state and federal pollution standards isn't a choice for TXU, any other company or anyone who drives a car. The decision to cancel eight proposed coal plants was the prospective buyers' own decision. I assume that they will propose other methods of meeting the state's electricity demand.
Hazel Gilmore: In most everything I read on the subject, you folks seem to be biased against TXU. Are you?
Elizabeth Souder: We are taking a hard look at a news event that could have big consequences for Texas. We always, always, always ask TXU and the buyers to comment on anything we write about them. Sometimes they choose not to, and that's their right.
From e-mail: From Kate Holody: Mr. Gale, how do you respond to the investors' response that ultimately the overall conclusions reached by your report are consistent with their commitments, and consumers will and have already benefited from this proposed transaction?
Roger Gale: As we say in the report, our goal was to analyze and recommend what we think constitutes an acceptable outcome for the customer. I assume the buyers would agree with us on many of the key points.
Mollie83: Do you all have a list of the companies you know who have guaranteed not to raise their prices until 2009?
Elizabeth Souder: Mollie, I have a list of companies that already charge a lower price than the 12.75 cents [per kilowatt/hour] the buyers will offer if the deal closes. You can find that list at www.powertochoose.org.
From e-mail: From Sarah: How did you determine that TXU would have been "forced ... to offer most of the same concessions"?
Elizabeth Souder: Before the buyout, TXU was already offering bonuses and developing new pricing plans to retain customers. Therefore, the buyers are likely taking an action that TXU would have taken itself, according to the report.
From e-mail: From Jim Epperson: Doesn't your report fundamentally misunderstand the role of the PUC by suggesting they secure commitments on TXU's generation strategy? Shouldn't an agency like the TCEQ [Texas Commission on Environmental Quality] retain its authority to determine what types of plants are best for the air quality in Texas?
Randy Lee Loftis: As you probably know, the TCEQ specifically disavows having any authority or interest whatsoever in determining the mix of power generation in Texas. The PUC is the only agency with utility oversight, whatever its form might be.
From e-mail: From Jay: Why is it TXU's responsibility to ensure that Texas has adequate power supplies?
Roger Gale: The perfect situation would be one in which we could be confident that market forces would assure that enough generation was built. I'm a strong supporter of competitive markets and want them to flourish because market-based decisions are usually better than ones made by fiat by governments. Unfortunately, large baseload coal and nuclear plants require very long lead times, extensive permitting, and are often opposed, so there is a need for TXU to provide adequate assurances, alternatives and commitments to meet supply requirements.
From e-mail: From Richard Adams: Mr. Gale, how can you say that the PUC should secure commitments for TXU to build new power plants?
Roger Gale: We didn't say that the PUC has legal authority, but that the PUC needs to protect the public interest by addressing the issue of supply adequacy and that TXU, like many utilities in many states, needs to lay out a detailed generation plan.
From e-mail: From David A. Lethe: How will [buyout] funding be obtained, if not from raising rates?
Elizabeth Souder: Roger points out in his report that the buyout crew might come up with innovative products to boost revenue. Or they might raise rates. The point is, the buyers haven't said how they'll make this deal work financially. We are certainly curious.
Peter: Could any of the moderators elaborate on why you think "competition" has not taken off in Texas like once thought?
Roger Gale: Competition has taken off more aggressively in Texas than any other state. Nobody – at least nobody I know – predicted that natural gas prices would go up so much, and when fuel costs are passed through to the customer, as they are in Texas, the result is much higher customer prices.
Silver: I would like to know why folks who are still receiving a bill from TXU Energy are willing to continue to do so, considering that there is competition and that all TXU Energy has done is raise the rates by 85 percent, from June of '02 till the beginning of '06.
Elizabeth Souder: It's true that about 38 percent of Texans have switched from the former utility monopoly to a different provider. Some people have switched to competitive pricing plans offered by TXU. And the buyers have promised to cut prices for those customers still on the standard, formerly regulated rate, which is about 1 million customers.
Hazel Gilmore: Your lead sentences on the subject of future prices of electricity to the consumer always say the price "could" (my emphasis) be greater. Of course it could and by definition it could also be less. Why not mention that?
Elizabeth Souder: When the buyers said they would cut rates, we wrote it. When our independent consultant said the buyers might raise rates later, we wrote that.
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