AARP and TXU make moves

By R.A. DYER - Star-Telegram Staff Writer - Wed, May. 30, 2007

AUSTIN -- In almost simultaneous actions, a major consumer group urged Gov. Rick Perry on Tuesday to call a special session to fix "the deregulation mess in Texas" and TXU pledged to provide more rate cuts to more than a million customers.

Both actions came a day after lawmakers ended the 80th Texas Legislature without adopting legislation to protect ratepayers. Many lawmakers had promised such legislation, and consumer groups like AARP had made it a top priority.

TXU announced plans Tuesday to provide an additional rate cut of 5 percent, to complement a 10 percent reduction already announced by the company and the private investors set to buy it. TXU said in a release that the full reduction will mean about $395 a year in savings for a typical customer.

A spokesman for the private investors said the final 5 percent reduction will go into effect when the transaction closes and will remain in place through December 2008.

The price reductions are for customers who have never switched service.

Michael MacDougall, a partner with Fort Worth-based TPG, which, along with Kohlberg Kravis Roberts & Co., is in the process of buying TXU, connected the decision to the legislation that failed.

"This issue was debated during the 80th session of the Texas Legislature that ended yesterday. We listened closely, and we understand that the driving force behind the legislation was the desire of elected officials to lower prices for residential customers," MacDougall said.

At almost the same time that TXU and the private-equity firms announced the rate cuts, AARP Texas issued a letter to Perry, urging him to call lawmakers back to Austin.

"Specifically, we ask you to instruct legislators to provide a 20 percent rate discount that does not have loopholes, create new disconnection protections for vulnerable customers, reform the wholesale pricing system that inflates rates across the board and take strong actions to prevent big electricity companies from dominating the market," AARP Texas Director Robert Jackson wrote in his letter to the governor.

Jackson said the cuts announced by TXU on Tuesday do not change the need for a special session, because ratepayers in other parts of the state won't see any benefit and because the company's commitments do nothing to address problems with the deregulated power market.