The man named by Texas Gov. Rick Perry to chair the Public Utility Commission, the board that will oversee the deregulation of retail energy providers in Texas, has concerned consumer groups who fear the appointment of the former energy company executive is a conflict of interest.
Mario Max Yzaguirre, who recently resigned his position as president of Enron de Mexico, was sworn in Wednesday as chairman of the three-member PUC. Enron de Mexico is a subsidiary of Enron Corp., a Houston-based company with a large interest in providing energy to consumers after deregulation takes place in 2002.
Yzaguirre, a University of Texas-Austin School of Law graduate and the son of former UT System Regent Mario Yzaguirre, was appointed to the commission earlier this month by Perry. Joining Yzaguirre on the commission is Rebecca Armendariz Klein, a former policy director for George W. Bush when he was governor as well as a former attorney for the PUC. The third commissioner is Brett Perlman, a Houston management consultant appointed by Bush when he was governor.
Enron Corp., which sells energy to California utilities, has been accused of price gouging by California state officials.
Harvey Rosenfield, president of the Los Angeles-based Foundation for Taxpayer and Consumer Rights, said that in light of the energy crisis faced by California, Texas officials should tread lightly.
“Putting an Enron executive in charge of deregulation is like putting a fox in charge of a chicken coop,” he said. “Not everything in our country needs to be subject to a free market. There are certain things that we need to have a reliable and affordable supply of, and electricity is one. That’s why, for the past 100 years, these companies have been regulated for consumer protection.”
Rafael Ayuso, spokesman for the Southwest regional office of the Consumers Union’, said Yzaguirre will have to work hard to overcome his image as an advocate for energy corporations instead of one for consumers.
“His votes on critical issues will be the proof of whether the [public’s] perception is warranted or unwarranted,” he said.
Ayuso added that with Texas on the verge of deregulation, it is especially critical that consumers feel like they have an advocate on the commission.
“Regardless of his actions as commissioner, there will always be a perceived conflict of interest, which we are concerned could limit his effectiveness,” Ayuso said.
Terry Hadley, a spokesman for the PUC, said all PUC members and employees must divest interests in companies that fall under the commission’s authority. He said commissioner’s holdings are subjected to review by the Texas Ethics Commission.
He added that a strong background in energy policy is necessary to serve on the commission and that it is not just a figurehead position.
“Unlike some other commissions, this is a full-time, heavy-lifting job,” Hadley said. “You really have to get into the issues, understand them and make very significant policy decisions.”
In 1995, Texas deregulated the wholesale energy industry, and the Legislature passed the 1999 Texas Electric Choice Act, which provided the structure for deregulation at the retail level to begin in January 2002. Because of the increased competition deregulation will bring, Hadley said consumers can expect a rate cut in energy costs.
However, he said rates will continue to fluctuate based on fuel costs.
“Still, we would expect and customers can expect to see a better deal under competition than they would in the monopoly regulated scenario,” Hadley said.
Hadley said that Texas won’t face the same issues that have arisen in California in recent months. The 1995 deregulation step has allowed Texas the time to develop sufficient generation sources, of which California has a shortage.
PUC commissioners are elected to six-year terms, though Yzaguirre and Armendariz Klein are completing the terms of Pat Wood, who accepted a position on President Bush‘s Federal Energy Regulatory Commission and Judy Walsh, who resigned from the commission in March.