Stranded costs have bubbled to the surface again in the Texas market. Last week CenterPoint energy was granted permission to add a charge to customers for the portion of their called stranded costs that were denied by the Texas PUC. Loren Steffy at the Houston Chronicle wrote and article at Fuelfix covering the background on this Texas Supreme Court ruling.
The Texas legislature was concerned about the regulated utilities not swallowing the costs of their generation plants build under the regulated umbrella. The big dark questions:
- What was the marketplace value of the plants?
- What was the best way to determine this value?
- Should there be a way to protect the consumers from mistakes?
Now that the dust has settled it appears that the stranded cost issue was probably not a real issue. The regulated utilities had no incentive to control costs when they built generation plants so the costs were not under any market forces to be efficient. Now that almost every Texas generation plant that existed when deregulation took place has been “flipped” at least once or twice we know the utilities must have sold them too cheap. But why should they worry with the consumers covering their back so to speak.
The dollars to be collected over 20 years is not chump change either: $1.7 billion.
