Imagine if one day, the government said you could only use one cell phone provider, chosen by the government, unless you notified the government in a very short window that you wanted to find your own provider. Everyone not "opting out" would be forced to use the government-chosen, one-size-fits-all cellular plan, like it or not. If the government plan doesn't have features you want, like rollover or anytime minutes, unlimited calling to family or faves, or new gadgets like iPhones or blackberries, you'd be out of luck. Sounds pretty crazy, right? But that exact scenario is being pushed in the Texas legislature when it comes to electricity company options, as municipal governments push for a plan that would allow a process called "opt-out" municipal aggregation to force everyone to use a government-selected energy provider.
Here's how the process would work. City or county governments would negotiate with an electric company on behalf of all of their citizens. All customers currently not on a contract with an energy provider would be forced to take service from the government energy supplier, unless they send an "opt-out" notice to the government within a short timeframe, probably only 30-60 days. If a customer doesn't opt-out, they are automatically switched to the government's new electric company, without the customer's consent.
If a private energy supplier did that, it would be called "slamming" -- the unauthorized switch of a customer's electric service provider. However, two politicians -- Rep. Jim Keffer (R-Waxahachie) and Sen. Wendy Davis (D-Fort Worth) -- are seeking legislation which would basically allow government-sponsored slamming: Senate Bill No. 1481 and companion House Bill No. 2780. Under the bills, if you don't have a contract with an energy provider, the government could force you to take service from their supplier.
This slamming could affect more customers than proponents say. Proponents, like municipal governments in the Cities Aggregation Power Project (CAPP), say the measure is meant to cover Texans who haven't "chosen" a power provider yet, like customers who have remained with the old former utility, companies like TXU Energy and Reliant Energy. However, many customers have actually "chosen" to stay with those companies, even if they've never signed a formal contract, because they like those companies' service or rates. In fact, TXU's "incumbent" customers -- meaning those who have never signed a contract with TXU -- are the ones who have received TXU's recent price cuts, 15% in the past year. Under the CAPP aggregation plan, customers would lose out on such savings, as well as the ability to find a plan that fits their unique needs.
Furthermore, many customers who have chosen a new energy supplier may not actually have a "contract" with that supplier -- because they're on a no-obligation, monthly plan, or because their contract expired and they're being served on a rollover plan. These customers, apparently, could also be slammed by the government because they don't have a formal contract.
So why would anyone support such a crazy plan? CAPP says it's so customers can get lower electric rates. But the fact is competition is so cut-throat in the electricity market now, that aggregation will not result in any lower rates than what customers can get individually. This has been proven in the results from several test aggregation pools CAPP has tried. Rates in those plans were no lower than what was available from electric companies in the market, meaning joining the pool would have little benefit for customers. That's why CAPP is now trying to force customers to join the aggregation plan.
And the aggregation means big money for the governments involved, which is the real reason behind it. According to a column by Peggy Venable in the East Texas Review:
"The gravy train has already arrived for a number of lobbyists for the city aggregation plan. This session, seven CAPP lobbyists are making as much as $470,000 and lobbyists made up to $330,000 last year, at the CAPP cities’ expense. Again, taxpayers are footing the bill for lobbyists working against free enterprise and consumer choice."
Municipal opt-out aggregation is a bad idea for Texans for two simple reasons: it won't save them money, and it takes away their choice.