Retail natural gas consumers in the Lone Star State have paid "tens of millions of dollars more" for the commodity than they should have due to "one-sided" decisions by the Railroad Commission of Texas (RRC), a coalition of Texas cities' analysis charges.

"With regards to keeping a lid on natural gas utility rates, the Texas Railroad Commission has fallen woefully short," said Arlington, TX, City Attorney Jay Doegey, co-chair of the city coalition that sponsored the report. "This report shows that our railroad commissioners have repeatedly overturned the recommendations of the agency's own experts when making rate decisions. In nearly every instance, the effect has been to give the utilities more of our hard-earned cash."

The analysis is part of a report titled "Natural Gas Consumers and the Texas Railroad Commission," which was sponsored by the Atmos Cities Steering Committee, a coalition of more than 150 Texas cities that acts as a watchdog on behalf of municipal and residential gas consumers.

The RRC oversees base rates for gas utility service. The three elected railroad commissioners set base rates during contested cases in which both utilities and consumers -- typically represented by advocates for cities -- offer evidence and testimony.

The coalition report examined major base rate cases from 1997 to the present. It found that "in almost every case, the agency's commissioners awarded gas utilities more overall revenue than was recommended by their own expert advisers." These expert advisers, known as hearing examiners, are non-political state employees who sometimes spend weeks examining evidence and questioning witnesses. Acting in a quasi-judicial capacity, hearing examiners are charged with reviewing evidence on both sides of a rate case and then offering non-political, non-biased advice to the RRC.

The watchdog reviewed the outcome of 10 base rate cases. In eight of the cases, the effect of the RRC's action was to award the utility company more money than was recommended by hearing examiners, the report said. In the two exceptions to that pattern, residential consumers still "fared very poorly," according to the coalition.

"In one [case], the commission rejected a recommendation to decrease residential rates by $21.5 million and instead awarded the utility an increase of $10.1 million," the coalition said. "That's a shift of $31.6 million against consumers."

The coalition report's release was timed to coincide with a meeting Wednesday to consider recommendations made in a Texas Sunset Advisory Commission report on the RRC, which was released last month (see Daily GPI, Nov. 22). Among that report's recommendations: the RRC should be renamed the Texas Oil and Gas Commission and it should be governed by a part-time appointed board, not three elected commissioners. The Texas Legislature is expected to review RRC operations during its upcoming session, which begins Jan. 11.

For a copy of the coalition's report, visit www.texasgasconsumers.org.

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