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Texans Seem to be Happier With Electric Companies

Texans are griping less about their electricity providers, but a sharp spike in complaints against one small company may affect oilman Ray Hunt's $18 billion bid to take over the state’s largest electric transmission company.

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Texans are griping less about their electricity providers, according to a consumer advocacy group's analysis released Wednesday.

Complaints filed with regulators about electric companies and utilities this year fell to their lowest level since the state deregulated its power market in 2002, according to the analysis by the Texas Coalition for Affordable Power, a consumer group that looks at complaints filed with the state Public Utility Commission.

The report also highlighted a dramatic surge of complaints against Sharyland Utilities, of note because it might factor into a Dallas oil and real estate mogul’s mammoth effort to take over Oncor, the state’s largest electric transmission company. 

Statewide, complaints — which cover a range of issues from billing disputes to spotty service — have tumbled in five out of the past six years. Texans filed 6,973 grievances during the 2015 fiscal year, down about 8 percent from the year before. The coalition applauded that trend.

“This report shows that Texans are becoming more comfortable with their electricity providers,” Jay Doegey, president of the group’s board, said in a statement. “It also follows generally improving trends we’ve seen relating to power prices. However, challenges remain.”

Still, long-term data shows consumers complain far more than they did before 2002, when the state allowed them to start choosing power providers. That trend, the coalition has suggested in past reports, signals that it has taken years for consumers to fully adjust to the free market.

A PUC website called Power to Choose allows consumers to compare companies’ prices and complaint history. 

In 2009, the PUC logged nearly 16,000 complaints, according to the coalition’s analysis. Regulators received more than 2,000 complaints in 2001, according to the report. The total ballooned to more than 8,500 the next year, before doubling in 2003.  

Industry representatives say factors other than deregulation have inflated the numbers. Texas grew, they say, and regulators made it easier to file complaints online. Those trends, however, don't explain the rapid spike in complaints immediately after deregulation, the coalition said.

Another highlight of this year's data: a nearly tenfold spike in complaints against Sharyland Utilities. Though the company, owned by the family of Ray L. Hunt, serves just 50,000 customers in small patches of rural West and North Texas, it has gained attention amid Hunt’s $18 billion bid to take control of Oncor, in a move that could hold huge implications for ratepayers and the electric grid.

To save on federal income taxes, Hunt wants to reorganize Oncor into a “real estate investment trust,” as he did with Sharyland. That would essentially divide the utility into two companies: one owning the assets (power lines, trucks and transformers, for instance), while the other rented the equipment, operated it and dealt with customers.

The unorthodox structure, more commonly used for shopping malls and elsewhere in the real estate world, would help Oncor borrow money at lower rates, proponents say, which could ultimately translate into lower electric rates for customers. But it’s nearly unprecedented in the energy world, making some consumer advocates nervous.

Hunt has pointed to Sharyland, a power and transmission provider, as evidence that the structure can work.

But Wednesday’s report documented 437 complaints in 2015 against the utility, up from just 47 in the year before. Most involved rates and bill charges. The coalition did not analyze reasons for the spike.

But customers of the tiny investor-owned utility are grappling with some of the highest electricity bills in the state, especially after the PUC restructured the company's delivery rates in 2014.

Hunt’s camp argues that a number of factors led to the higher rates — all unrelated to the company’s real estate-style structure, which, it argues has served the company well. 

Delivering power to sprawling rural communities, for instance, tends to cost more. 

Another major factor, highlighted in a recent PUC report, was Sharyland’s 2010 acquisition of Cap Rock Energy, an electric cooperative that later became regulated. With that purchase, the utility had to incorporate the new customers into the retail market. In 2014, the commission approved a new rate structure that lowered rates for industrial consumers but raised residential rates.  

Sharyland points out that it warned the commission of potential “rate shock” and asked it to approve a different type of plan.

"Sharyland’s rates are not affected by our use of a Real Estate Investment Trust (REIT) structure," Paul Schulze, a company spokesman said.  "Our rates are set by the Public Utility Commission of Texas and are based upon our costs and how we allocate those costs to customers." 

Responding to customer complaints, the commission this month voted to slightly lower rates for Sharyland customers.

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