Debate over who should bear the brunt of looming rate increases at municipally owned Austin Energy shows one of the biggest benefits from the choice of electricity providers available in most of Texas -- customers don't have to worry about subsidizing other customers' rates.

The Austin-American Statesman reports that Austin Energy has proposed hiking residential electric rates by 23% next January.  While some of the increase is due to increased costs, much of the proposed increase, the Statesman reports, is due to a re-allocation of costs among customer classes.  Specifically, the utility is seeking to reduce the portion of costs paid by commercial and industrial customers by raising residential electric rates.

When customers can choose their electricity provider -- such as in Dallas, Houston, and Corpus Christi -- customers don't have to worry about whether they're paying a higher rate to support somebody else's subsidized rate.  With the electric choice introduced to most of the Texas utilities -- including Oncor, CenterPoint, and AEP -- customers who are unhappy with their electric rate, or think it's too high, can simply switch to a competing electric provider offering a low rate.

Unfortunately, customers at Austin don't have that right, as Austin Energy was exempted from electric choice because it is a municipally owned utility.  That means customers' rates are left in the control of Austin Energy and city politicians, and as a result, as noted by the Statesman, rates can be skewed by political decisions.

In other words, customers' rates in Austin may be artificially high to support giving a rate cut to another group of customers.  If an energy provider tried this in an area of Texas open to competition such as The Metroplex, they'd simply lose customers, because dozens of competing electric suppliers would offer lower, cost-based rates to any customer paying an artificially inflated rate.

This is one of many ways Texans benefit from electric choice.  If they think they're paying too much for electricity, they can find a lower cost supplier.  If they're unhappy with their provider's customer service, they can choose a supplier with better service.  If customers want an innovative "smart grid" product, or rewards points, as part of their electric service, they can choose among competing providers to find the best electric service package to win their business.  Electric choice empowers customers by giving them the ability to "fire" their electric provider, which is a strong motivator for providers to keep rates as low as possible, and to keep their customers happy.

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