Turn out the lights the party is over, except for the taxes

By BRENDA ALLUMSnews1@kilgorenewsherald.com

Where has all the money gone to help low income energy users pay their bills? To the state’s general fund to help it balance the budget.

About 391,000 Texans qualify for the LITE-UP Texas Program, which provides a 10 percent discount on their utility bills.

The Texas Public Utility Commission (PUC) sent letters this week to low-income energy users in areas of the state where utilities are deregulated informing them the program has been “discontinued due to lack of funding.” Most of northeast Texas is not subject to electric deregulation and, as a result, is not affected.

The letter, simply signed LITE-UP Texas, states: “The electric low income discount program, also called LITE-UP Texas, has been discontinued due to lack of funding. Your electric bill discounts will end after your August bill.”

The letter goes on to “encourage” this population to look into other programs that “may save you money on your electric bill or provide other energy-related financial assistance.”

The letter is misleading, according to Texas Rep. Sylvester Turner of Houston.

In a letter to W. Lane Lanford, PUC executive director, Turner called the statement about lack of funding “not exactly true.”

Turner wanted LITE-UP Texas to revise the statement to read, “Funding for the low income assistance program, also called LITE-UP Texas exists, but the state legislature has redirected those revenue streams.”

Turner said he hoped the revised wording would be accepted by LITE-UP Texas to “reflect a spirit of honesty that I believe is crucial for state government in Texas.”

The letter was not changed.

As in past budgets, the system benefit fund fee is collected from individual's electric bills and placed into the General Revenue Fund for the state budget. However, this budget cycle the money will not be drawn out in an equal amount to fund the LITE-UP Texas low-income assistance program. Instead, the monies deposited into General Revenue will be used to certify the two-year state budget.

"This fee has now become a tax that is being misrepresented to Texas families. Taxes said to be collected for a purpose should be used for that purpose or discontinued," said Hopson.

“During the 79th Regular Legislative Session, funding for the LITE-UP Texas electric discounts was redirected for other purposes,” stated Theresa M. Gage, governmental relations director for the PUC, in a letter addressed individually to members of the Texas Legislature and accompanied by a fact sheet on how to handle questions from constituents.

“The program is being discontinued because the Legislature decided to funnel money from the electric industry system benefit fund to balance the state budget instead,” said Carol Biedrzycki, executive director of Texas Ratepayers Organization to Save Energy (ROSE).

In 1999, the 76th Texas Legislature passed Senate Bill 7 to deregulate the electric industry in Texas. The measure passed in large part because certain safeguards were put in place to protect electric customers, especially the most vulnerable Texans. The promise of protection for those who needed help was the deal-maker for many legislators.

The System Benefit Fund was created to be the mechanism by which the state eased the burden of deregulation.

Those safeguards included the creation of the electric rate discount to help keep electricity affordable for low-income families, the elderly and disabled. A nominal average fee of 65 cents was added to electric customers' monthly bill, giving almost 800,000 households, which included the neediest people in Texas, up to a 17 percent discount on their electricity.

LITE-UP Texas was created in 2002 for billing assistance and weatherization programs for low income Texas living in areas where utilities have been deregulated. It was a part of the negotiations that led to deregulation of the electric utility industry in about 75 percent of the state.

Utility deregulation in East Texas has been delayed until at least the fall of 2009.

At LITE-UP Texas’ peak, almost 800,000 households received a 17 percent discount on their electric bills.

Since then, however, the safeguards have come under attack.

The rate discount was eventually lowered to 10 percent. The Public Utility Commission passed new rules making it harder to qualify and in one month, 350,000 households were dropped from the discount program.

In 2003, the money in the System Benefit Fund was redirected to be used for general revenue and last week, the PUC began sending out letters to another 391,000 customers across the state telling them that their rate discount is ending.

Families that already spend up to 47 percent of their total household income on utilities will now have a 10 percent increase in their electric bills.

Funds are collected from ratepayers in deregulated areas of the state on the basis of how much electricity is used. The average residential electricity customer pays about 65 cents per month.

Customers in the affected “are still paying the fee of 65 cents on your electric bill,” Turner said. “That money will generate an estimated $427 million over the next two years. However, only about $7.2 million is appropriated to the PUC; the rest will be general revenue for the state.”

In other words, Texans pay money with the understanding that it will go toward one thing and instead it goes toward something completely different.

“The governor and the Legislature have turned the Systems Benefit Fund into a tax on the ratepayer,” said Turner.

“We are very disappointed in the action,” said Kimberly Morgan, a spokesman for TXU Energy. “This was a vital part of SB 7, the Texas Electric Choice Act passed in 1999.”

Although the program has been discontinued and the fees redirected into the general fund, customers in deregulated areas of the state will continue to pay this fee for the next two years, but the proceeds will not go to assist low income Texans with their electricity bills. Instead it will go into the state’s General Revenue account.

“This was a highly successful program, but funds have been confiscated gradually by the state over the past two Legislative sessions,” Biedrzycki said.

“This is a new tax that will increase out-of-sight electricity rates another 10 percent for people who are already spending as much as 47 percent of their income on utility bills,” said Randall Chapman, executive director of Texas Legal Services Center. “Balancing the budget on the backs of low-income Texans is bad public policy.”

Tim Morstad, a policy analyst with Consumers Union, publisher of Consumer Reports, said the state has “broken a promise” to its citizens.

“A key promise to low income Texans when the state was choosing to deregulate electricity was to establish assistance programs to make sure the new market worked for everyone,” he said.

“Despite attempts this year by legislators to protect the System Benefit Fund and keep it for the purpose it was intended, the fund is still being raided,” Turner said. “What was left of the money has been swept away, leaving very little for low-income families, the elderly and the disabled.”

Local legislators are unhappy with the redirection of the fund, but all voted for the appropriations bill.

“It was part of the certification process for the appropriations bill,” Rep. Chuck Hopson (J-Jacksonville) said.

Hopson said that, as in past budgets, the system benefit fund fee is collected from individual electric bills and placed into the General Revenue Fund for the state budget. However, this budget cycle the money will not be drawn out in an equal amount to fund the LITE-UP Texas low-income assistance program. Instead the monies deposited into General Revenue will be used to certify the two-year state budget.

"This fee has now become a tax that is being misrepresented to Texas families. Taxes said to be collected for a purpose should be used for that purpose or discontinued," said Hopson.

“The program was initiated to help families in need,” said Rep. Tommy Merritt (R-Longview). “Discontinuing the program without discontinuing the tax is not truth in taxation and is not good policy for my district or the State of Texas.”

Sen. Kevin Eltife (R-Tyler) is also concurred about the actions.

“My concern is that any time we have a tax or fee designed for a specific purpose, it should be used for that purpose,” Eltife said. “We should not shift fees/taxes that are enacted by the Legislature for a specific purpose. If we aren’t using the money as intended, we should give it back to the citizens.”

Kathy Walt, a spokesperson for Gov. Rick Perry, pointed the finger at the Texas Legislature when asked who was responsible for the redirection of these funds.

“The Texas Legislature established the budget,” she said. “Talk to the legislators who made the decision.”

Walt said the governor “had no control over the budget, no line item veto...”

She did not, however, note that Perry signed the bill into law.

“This is not just bad politics, it is bad state policy,” Turner said.

“I’ve been working with some other legislators this session trying to promote truth in taxation and a government that works in the light,” Hopson said.

“Let's bring back the faded ideal of honesty and integrity in the Legislature and restore the trust Texas citizens have had in Texas government,” Turner said.

Hopson, Merritt, Eltife and Turner, like others feel the deal made to allow electricity deregulation has been broken.

“The deal made by the citizens of Texas to allow the government to work for them in good faith has been broken,” Turner said.

Now the question that arises is if a fee is paid by consumers to the utility company who passes it along to the PUC for a specified purpose, and the PUC then redirects the funds for other purposes, is it a fee or a tax?

No one at the state level is about to answer that question.

By definition a fee is a payment for services, while a tax is a levy on income, property or purchases.

The fact, as reported by the PUC, is the LITE-UP Texas program “has not been funded for the period of September 2005 through August 2007, the program will not be able to operate or give discounts during this time for electric service.

“Although the decision is now final for Sept. 2005 through Aug. 2007, it is possible that the program may be funded after that time. It will not be known until the Legislature meets in 2007 whether or not the program will again be funded.”

In the meantime, Biedrzycki said, “Instead of LITE-UP Texas, we have LITES OFF TEXAS!”