How CenterPoint fleeces Houstonians. And why we still can't rely on our grid. | Opinion

After Hurricane Beryl, as hundreds of thousands of Houstonians lacked power, CenterPoint Energy CEO Jason Wells discussed the company's efforts. The thermostat beside his head read 70 degrees.

Jon Shapley/Staff photographer

The aftermath of Hurricane Beryl has been an unspeakable tragedy, but at least we seem to have a better understanding of how our electric system works. For years, as a columnist for this paper, I had to patiently explain that when the lights go out, you can’t call the company on your electric bill. You have to call CenterPoint.

People seem to know that now. “CenterPointle$$” has become the stuff of I-10 underpass graffiti and trending hashtags. The public now knows who to blame.

For two decades, I’ve written about the shortcomings of electric deregulation in Texas. But it seems that with every crisis, new elements of failure emerge. In the aftermath of Beryl, we see that deregulation has swept away yet another important market safeguard — accountability.

When the regulated market was split apart in 2003, the transmission companies — in Houston’s case, CenterPoint — remained under government control. It would have been too unwieldy and expensive to allow competing transmission lines across the city.

As a result, CenterPoint has no real customers. It doesn’t answer to the public. It answers to the Public Utility Commission and to its shareholders.

Nothing captures its lack of accountability more than the image of CEO Jason Wells lounging in front of a thermostat set at 70 degrees while millions of Houstonians sweltered. Tone-deaf PR moves like that don’t happen at companies that are used to public accountability. 

That’s not to say CenterPoint doesn’t recognize its responsibility to the public, just that the public isn’t the ultimate boss. It knows that ratepayers unhappy with how it’s handled the latest disaster can’t switch to another company’s wires.

The PUC, whose members are appointed by the governor, has said it will investigate, but we shouldn’t expect it to bring CenterPoint to heel. The commission has long been less a watchdog of the public interest and more an emotional support animal for the industry it oversees. 

Gov. Greg Abbott, busy gallivanting around Asia on a trade junket, made it back six days into the crisis and demanded answers from CenterPoint. Abbott assembled the requisite public officials in over-starched crisis attire emblazoned with the logos of their office. But we saw the same show after the fatal freeze of 2021. The tough talk did little to address the grid’s failures.

At some point, Abbott’s table-pounding will fade and he’ll remember that the well-cooled Wells has contributed $12,000 to his campaign since 2021. (Wells has been CEO since January of this year. His predecessor, David Lesar, was also an Abbott donor.)

We taxpayers have spent billions upon billions of dollars trying to fix our broken grid, and we keep coming up short. Our state leaders, their campaign coffers fattened by the companies and executives who profit from the market flaws, cling to the ideology that a partially deregulated market, with enough tweaks, may finally work. They’re hoping you don’t notice how they keep shoveling money into the abyss. 

So let’s review some of the more egregious costs:

Remember that constitutional amendment that Texans voted for, and this newspaper grudgingly endorsed, last year? The $10 billion “energy insurance fund” it created was supposed to give us a more reliable market. Some $7.2 billion was to provide loan subsidies for building more thermal power plants by 2029. This a tacit admission of the market’s failure. Despite the need for more generation, the market doesn’t create the financial incentives needed to buy more generation unless the government subsidizes them. In other words, your electric bills aren’t enough.

So now, the PUC, an agency with no banking or financial expertise, is in the loan business. Generators know a good handout when they see one, so the state, which received $39 billion in loan applications, is expanding the fund.

The remaining $2 billion was earmarked for developing backup power systems, grid modernization and weatherization around the state. The darkened stores, houses and streets of Houston over the past two weeks remind us how desperately all of these things are needed. But again, these are basic improvements that our bills should be paying for. They shouldn’t be an add-on cost.

Then there’s the $6.3 billion or so worth of bonds that the state used to cover the cost of the market failures in the 2021 disaster. We’ll be carrying that debt until about 2050. Children now in diapers will reach adulthood to find their electric bills fattened by the failings of the past. That, too, is a way of dispersing accountability. Unless you read the fine print on your electric bill each month, that money is largely forgotten.  

The state budget surplus could have covered these costs. Instead, our state leaders chose to force future generations to pay for their mistakes.

And those are just the latest bills. Houstonians have paid dearly for our deregulation debacle. Back in 2004, the PUC granted CenterPoint the right to recover $2.3 billion for the “stranded costs” of power plants it inherited from the old Houston Lighting & Power.Stranded costs are an industry term that means the amount a company invested in a plant exceeds its market value. That added $5.10 to the monthly bills of all Houstonians.

But it wasn’t enough. CenterPoint came back to the PUC in 2011, saying it needed another $1.7 billion. If you’ve read this far, you already know what the PUC did.

And what happened to those plants? CenterPoint sold them to billionaire David Bonderman for $3.7 billion. Bonderman flipped the plants, selling them to NRG a year later for $5.8 billion. Apparently those costs weren’t so stranded after all.

With the PUC’s loving assistance, CenterPoint fleeced Houstonians to the tune of $4 billion, and left about $2 billion on the table.

This has been the legacy of deregulation — the slow drip of taxpayer billions over the years. That doesn’t even count the higher electric bills consumers paid in the early years, the broader economic impact of power failures, or the cost of smart meters that CenterPoint rolled out, in yet another failed promise, to speed disaster recovery.

So we are left with a system that leaches billions from our pockets and no one who’s willing to do anything about it. The leaders who perpetuate this failed system keep getting reelected, and CenterPoint and other players in our electric mayhem continue to get belly-scratches from the PUC.

The market that has failed us so often since 2003 will continue to cost us more and more while delivering less and less. It’s a market that promised lower prices and didn’t deliver, that promised more reliability and didn’t deliver. And now, as the energy capital of the world emerges from a week-long blackout, we see yet another broken promise: accountability.

Table-pounding, legislative tweaks and billing the unborn won’t fix it. The system needs a complete overhaul — and this time around it needs to put consumers and reliability first.

Loren Steffy is an author, former Houston Chronicle business columnist, writer-at-large for Texas Monthly and founder of Stoney Creek Publishing Group.