April 14, 1999
Deregulation-Hungry Power PACs

Austin — Political Action Committees (PACs) linked to electricity-generating companies spent almost $5 million in the last two election cycles, as the Texas Legislature has debated proposals to deregulate electric-ity sales.

Power PACs spread their expenditures fairly evenly over the two election cycles, spending $2,575,369 in the 1997-1998 cycle. In that cycle, power PACs accounted for five percent of the $51.5 million total spent by all registered PACs.

The floundering of deregulation in the 1997 session cannot be blamed on a lack of PAC grease. Rather, lawmakers failed to produce a bill that all sectors of the power industry could live with. The strongest deregulation advocates—the unregulated wholesale generators that sell wattage to regulated utilities—have been dramatically outspent by investor-owned utilities.

In 1997, for example, a Houston Chronicle analysis found that six key lawmakers wielding deregulatory clout in 1997 took $41,000 from PACs and executives of companies with a direct stake in the issue; 71 percent of this money came from investor-owned utilities1.  Sen. David Sibley, R-Waco, received more utility money--$17,750—than any other member that the Chronicle tracked.

Sibley has emerged as the Legislature’s deregulation point man. A recent Sibley compromise tosses bones to all the industry players. The interest that arguably gets the shortest shrift is the one without a PAC—residential electric consumers.

Investor Utilities
A major challenge to lawmakers has been the powerful investor-owned utilities, which have long enjoyed monopoly control of their markets. Investor-owned monopolies generated the most PAC power in the 1998 cycle, spending $1,827,159, or 71 percent of the total.

These Big Boys demanded major concessions for the break up of their monopolies. To entice them, the Legislature is promising to:

The Legislature also wants to use deregulation to compel filthy utility plants to install pollution controls. But the legislation again puts residential consumers on the hook for these costs.

The leading deregulation champions include:

PACs affiliated with wholesale vendors spent $681,690, accounting for 26 percent of the 1998 power PAC expenditures. Houston-based giant Enron Corp. dominated this sector, spending $466,234.

While this Lobby Watch focuses on PACs, an earlier edition noted that two top wholesale electricity executives are among the state’s top individual political spenders. Robert McNair of Cogen Technologies dropped least $302,500 on Texas politics in recent years; Enron chief Ken Lay spent at least $129,0002.

Coops & Municipals
The only PAC representing the power monopolies run by municipalities and rural coops was the Rural Friends of Texas Electric Cooperatives, which spent $66,520 in the 1998 cycle. Nonetheless, these utilities—the most threatened by deregulation—field a strong lobby presence and enjoy strong rural grassroots support. The coops helped kill deregulation in 1997.

The Legislature placated these utilities by letting them continue to bar competition from their markets. But they may not be able to keep the deregulation genie in the bottle long.

Residential Consumers
Texans most likely to lose out in a deregulated power market are those who exert little to no PAC or lobby influence in Austin—residential consumers. The Legislature has dashed hopes for big deregulation cost cuts on residential power bills by saddling regular Texans with billions of dollars in “stranded costs.”

The residential power consumers who have the least chance of reaping benefits from a deregulated market are residents of sparsely populated rural areas, which are the most expensive to serve.

Power-Generating PACs, 1995-'98
  Affiliated PAC Affiliated PAC Utility
Power Utility Parent Company $, '97-'98 $, '95-'96 Type
Reliant Energy (formerly Houston Industries)* $680,471 $559,827 IOU
Texas Utilities $524,445 $536,972 IOU
Enron Corp. $466,234 $406,100 W
Central & South West (CSW) Corp.* $256,650 $192,840 IOU
Coastal Corp. $191,756 $195,450 W
Pacific Gas & Electric (PG&E)*† $184,859 $201,430 IOU
Destec Energy $0 $59,662 W
Rural Friends of TX Electric Cooperatives $66,520 $66,098 RC
Entergy/Gulf States Utilities Co. $64,510 $26,914 IOU
TX-New Mexico Power Co. $49,100 $39,800 IOU
New Century Energies*† $28,974 69,075 IOU
Duke Energy Corp. † $23,700 $25,298 IOU
El Paso Energy Corp. $23,700 $14,250 W
El Paso Electric Co. $11,950 $8,298 IOU
MCN Energy Group† $2,500 $0 IOU
Total $2,575,369 $2,402,013  
 IOU = Investor-Owned Utility; W = Wholesaler; RC = Rural Co-op.
† = Investor-Owned Utility that does not operate PUC-regulated monopoly in Texas.
* Subsidiaries with PACs: Reliant Energy: NorAm, Entex; Texas Utilities: Enserch; CSW Corp: Central Power & Light, West Texas Utilities, Southwestern Electric Power Co.; Pacific Gas & Electric: Valero; New Century Energies: Southwestern Public Service Co.

1 “Legislators voting on electricity plan got utility PAC money,” Houston Chronicle, May 1, 1997.
2 See “17 Kingmakers Shape Texas Politics,” Lobby Watch, March 4, 1998.

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Texans for Public Justice is a non-partisan, non-profit policy & research organization
 which tracks the influence of money in politics.

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