TX - Utility's miscalculation benefits Gatesville customers By CINDY VAN AUKEN Tribune-Herald staff writer Gatesville electric customers have been getting a bit of a free ride the past year and a half.

Most residents have been saving about 20 percent on their utility bills, thanks to the city's participation in an electricity deregulation pilot program. But at least part of that savings is due to a miscalculation by their utility company, not the power of a free market.

Officials from Texas-New Mexico Power Co., which has historically served the Gatesville area, notified city leaders about the error last month. The company claims that inaccurate projections about the city's electricity usage caused it to underbill customers by about $900,000, City Manager Brandon Emmons said.

In order to recoup some of the lost revenue, company officials approached the city about raising customers' rates for the remainder of the pilot program, which ends Dec. 31, Emmons said.

But the company dropped its request after finding out that the city council would have voted against a rate change, said Sandra Steubing, a customer relations manager for Texas-New Mexico. She said the company didn't want to go through the hassle of having to appeal the council's decision to the Public Utilities Commission, a process that would have taken months.

"It just wasn't worth it," Steubing said.

Gatesville has been participating in Texas-New Mexico's "Community Choice" pilot program since November 1999. It has allowed the city council to buy blocks of energy from suppliers based upon which utility offers the best price.

In order to negotiate the best deal, city leaders decided to aggregate, or form a single purchasing unit with, its 3,000 electricity customers. It then solicited bids from companies, finally choosing Bryan Utilities, which estimated it could save customers about 10 percent on their bills.

To facilitate the deal, Texas-New Mexico had to buy blocks of power from Bryan instead of using electricity it generated itself. But it still used its existing lines and poles in Gatesville to deliver the electricity.

The company projected how much power it needed to buy from Bryan based on the average electricity usage of its entire customer base in 1998, Steubing said. That's where the mistake came in.

Gatesville customers apparently use less electricity on average than other customers served by Texas-New Mexico, Steubing said. That left the company with a lot of unused power that it was not able to bill anyone for.

The problem could have been avoided if the company's substations were able to separate electricity loads by city, Steubing said. However, they are only equipped to separate loads by individual customers and not by a bloc of customers.

To make sure something similar doesn't happen in the future, Steubing said the company could make projections by calculating averages from customers who are located in a certain area instead of using more generalized averages. She said she did not know why the company did not use that approach for the pilot project.

"It's a valuable lesson," Steubing said. "Any test market is a valuable lesson."

Gatesville was chosen to participate in the pilot program after lobbying Texas-New Mexico and the utilities commission for about a year. The move was spurred by rising electricity rates city residents were paying because of increasing generation costs that were specific to Texas-New Mexico, city officials have said. Olney, a small town about 130 miles northwest of Dallas, was the other city chosen for the program.

So far, the customers in the two cities have been the only Texans to test deregulation. But they will be joined by others this summer. Starting June 1, up to 5 percent of Texas electric customers will be allowed to choose which utility company they buy their electricity from.

http://www.accesswaco.com/auto/feed/news/local/2001/05/29/991109767.05955.1540.1734.html

-- Anonymous, June 07, 2001