With a Broken Safety Net Abandoned, What’s Next For Low Income Texans?

Mose Buchele for StateImpact Texas

State Rep. Sylvester Turner helped create the System Benefit Fund. He will now see the fund drawn down.

At the start of the year, over $800 million sat unused in a state fund designed to help low income Texans, and state Rep. Sylvester Turner, D-Houston, thought there was nothing he could do about it.

“If you had asked me in January, did I envision these dollars going to the intended population? I would have said ‘No,'” Turner, a Houston attorney, says now. “I simply did not think that that legislature, with the leadership that was in place, would take those dollars and put them towards poor people.”

He’s not kidding. I did ask him late last year, and that’s pretty much what he said.

Now, months later, the money is likely going where he did not think it would, into discounts to help poor Texans pay their electric bills. But the budget deal that freed the money up ensured that all assistance will disappear within a few years. That’s left some low income Texans, and their advocates, unsure whether to claim victory or defeat.

‘Like An Addict’

Set up when Texas deregulated its electricity market, the System Benefit Fund collected fees from ratepayers in deregulated parts of the state to give discounts to poorer people in those same areas. But things never went according to plan. Year after year, lawmakers reduced or sometimes eliminated the discount. The Public Utility Commission of Texas also reduced the number of people receiving the benefit.

That provoked a lot of anger because the state was benefiting from withholding the discounts. By keeping the money in the fund, lawmakers could use it to certify the state budget. They did not spend the money. It just stayed there to show that the state had the cash on hand.  Meanwhile, fees paid by other ratepayers streamed into the fund, causing it to balloon to its current size.

The state was “like an addict” on that money, Turner told StateImpact Texas in that first interview. Heading into the 2013 regular session, there were several different proposals for how to kick the habit. Turner, thinking lawmakers would not abandon the $800 million cash on hand, proposed that new contributions to the fund be moved outside the treasury, where it would have to go towards ratepayer assistance.

Barring that, he filed a bill that would end contributions into the fund altogether.

Another proposal would have ended fees for the fund and paid back the full balance to the ratepayers who had contributed it. Turner objected — if the money was going to get paid out, he wanted it to go to the low income people it had been collected for. So, under the budget deal that was worked out, the state will stop collecting fees for the fund and start paying out. Big time.

During hotter months for the next couple years, low income ratepayers in deregulated parts of the state (those exclude places like San Antonio and Austin which own their electric utilities) can expect to have 80 percent of their electric bills covered, according to Turner. After that, the size of the discount will shrink until the fund is completely emptied.

That’s when things get tricky.

What Comes After?

Mose Buchele for StateImpact Texas

Carol Biedrzycki worries about what will happen when the fund is depleted.

“My concern is, what happens when the program ends? What are we going to do to make sure we have affordability in Texas?” Carol Biedrzycki, the Director of the advocacy group Texas Ratepayers Organization to Save Energy, told StateImpact Texas after the budget deal was struck.

Turner says he shares those concerns. But he still considers a deal that finally brings the $800 million into the pockets of the poor a “major victory.” If the fund had been allowed to continue, he adds, it would have been too much of a temptation for future legislatures to misuse.

Now, he says any future solution may require initiative from private electric companies.

“When seniors and other low income people are having their power turned off in June, July, August — I think there’s going to be a tremendous amount of pressure on the industry and the Public Utility Commission to do something,” he said.

Of course, low income ratepayers hope it does not come to that.

‘We have worked all our lives’

“I intend to still be here a couple years from now!” Edith Williams laughed, when I reached her on the phone to get her opinion.

Photo by Mose Buchele

Edith Williams (picture here with her do Bella) says lawmakers and utilities should not "leave seniors out."

Williams is a 69-year old retired housekeeper who sometimes receives benefits from the fund to keep her power on. She says her friends do, too.

“It’s a little hard for us to ask for assistance, but we do need assistance. We’re not people that didn’t work. We have worked all our lives,” she said when we first spoke about the fund in November.

In our phone conversation she said that, if no assistance is available, some of her friends may be forced to move in with their grown children during hotter months, others may simply sweat it out with no air conditioning in their apartments.

“My message would be don’t leave your seniors out without any assistance,” she said. “Please don’t leave us out.”