Taking Power From Cities
By R.A. Dyer, Fort Worth Star-Telegram, Texas
Jan. 25–AUSTIN — Municipalities like Fort Worth would lose some of their policing powers over the local natural gas utility — a move that consumer groups say could lead to higher home heating bills — under legislation pending in the Texas House.
The legislation, House Bill 651, is being pushed by Atmos Energy, which finds itself at odds with Fort Worth and other cities over the company’s proposal to raise home heating rates.
Under the bill, Atmos and other gas utilities could sidestep municipalities at the initial stage of rate cases and instead give “original jurisdiction” to the three-member Texas Railroad Commission, a historically pro-business agency.
Although it might sound like a technical adjustment, the effect would be very real, say city attorneys and consumer groups.
“I would say this would increase the cost to consumers considerably,” said Geoffrey Gay, an attorney representing Fort Worth and other North Texas municipalities in gas-utility matters.
But Atmos officials disagree, insisting that the legislation could lower rates because it streamlines the regulatory process. “Our concern is the same as that of our customers — and that’s lower prices,” said Junior Aston, Atmos’ vice president of government and public affairs.
The law now gives municipalities jurisdiction over rates, operations and services of gas utilities that operate within city limits. City councils can require gas utilities to open their books and justify their rates, then order reductions if they don’t like what they find.
Appeals by utilities
Utilities can appeal those decisions to the Railroad Commission, and from there to district court.
But under HB 651, Atmos and other gas utilities could bypass the city’s jurisdiction and instead have the Railroad Commission become the first arbiter of rates. Utilities could choose which municipal jurisdictions to bypass and opt back to municipal jurisdiction if they choose.
City attorneys and consumer groups say they have serious concerns about the legislation.
A policy analyst for AARP said the bill would let utilities to “forum shop” by allowing companies to go directly to the Railroad Commission if they don’t like the treatment they expect at the city level.
Likewise, city representatives say the law could force unfairly high utility rates for extended periods — even indefinitely — because cities would lose the ability to order Atmos and other companies to open their books. Instead, city officials would have to wait for action from the Railroad Commission, an agency that consumer groups say has a particularly spotty record when it comes to protecting consumers.
Agency watchers have noted that the Railroad Commission has not initiated a rate case against a gas utility in more than a decade. Recently, a Star-Telegram investigation found that the agency went a decade and a half without levying a fine against a gas company for a pipeline accident, despite scores of reports each year about potential safety incidents.
Cities’ watchdog role
In addition, it was city attorneys — not commission investigators — who recently discovered that Atmos was trying to pass on to consumers the cost of $800 and $900 hotel rooms for its executives, cases of expensive wine, artwork and limousine rides.
“If it were not for the cities and their accountants, we would never know about these things,” said Tom “Smitty” Smith, director of the Texas office of Public Citizen. “If it weren’t for the cities, there would be virtually no voice for the average consumer in these cases. The Railroad Commission has generally failed in its duty to take aggressive action to police the industry it’s supposed to regulate.”
But Atmos spokesman Rand LaVonn said the legislation does nothing to limit the ability of cities to intervene in cases once they are under Railroad Commission consideration, although he acknowledged that it would prevent cities from implementing rate cases on their own.
He also said there are great benefits to the legislation.
Atmos sees lower costs
He said it will reduce attorneys’ costs that end up getting passed on to home ratepayers. He said it will also streamline the regulatory process under which the utility has to file its rate requests before hundreds of separate municipalities.
“This cuts the time [of a rate case] in half, and anytime you cut the time in half, you cut the cost,” LaVonn said.
Atmos has a request before the Railroad Commission to raise rates by about $63 million annually, or about $4 on a typical monthly bill. Cities want to reduce rates by more than $30 million annually, which could be $5 in savings on a typical monthly bill.
Either way, heating bills will probably go down this year compared with costs during the same period last year because of declines in the price of natural gas. HB 651 will have no effect on that case.
Railroad Commission spokeswoman Ramona Nye declined to comment. The author of the legislation, state Rep. Will Hartnett, R-Dallas, could not be reached for comment.
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R.A. Dyer, 512-476-4294 rdyer@star-telegram.com
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Copyright (c) 2007, Fort Worth Star-Telegram, Texas
Distributed by McClatchy-Tribune Business News.
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