Reform and Reparations Are Due Texans in Wake of Alleged $43 Million in Overcharges by Electric Producers

Garland, Texas - In response to the news of six electric producers allegedly overcharging Texans an estimated $43 million, Garland Power & Light officials are calling on Electric Reliability Council of Texas (ERCOT) and the Texas Public Utility Commission (TPUC) to implement reforms and urging the public to put pressure on state regulators through their state legislators.

Several electric power producers and marketers are under inquiry of gaming on the Texas wholesale electrical market and may have overcharged Texas electrical customers approximately $43 million.

"We believe that such gaming is made possible by inherent flaws in the way electric deregulation has been implemented in Texas - flaws that should be corrected," said Jim Harder, director of electric utilities for the City of Garland, which operates Garland Power & Light, a community-owned electric utility.

"Reforms by the TPUC and ERCOT are needed to protect fair-playing utilities and electrical customers," says Harder. "We're upset that this group of six retail electrical providers is potentially being allowed to abscond with more than $43 million. The Texas PUC is investigating the issue and has not yet stated whether these companies will be asked to refund the money."

Earlier this year, GP&L officials and representatives of other customer owned systems, warned that loopholes exist in the protocols established for wholesale electrical trading that could encourage gaming.

"Because of the way inter-zonal congestion charges are calculated, a company can contribute transmission congestion and then be paid to cure the congestion they helped created," according to Mr. Harder. "This type of gaming works the new system from two angles. A generating company can deliberately over estimate its load on one side of a power transmission congestion point. When the actual load is less than the inflated estimate, ERCOT pays the company for the "reduced" load. They are getting paid to solve an artificial shortage and imbalance they created," he explains.

"The loopholes that permit such gaming are just one of the many serious deregulation-related problems the TPUC and ERCOT have not addressed in an effort to cast Texas' deregulation in a positive light," says Harder.