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November 16th, 2021:

Beto makes it official

You heard it here in Texas Monthly first. Or maybe you got the campaign announcement in your email, which I got at basically the same time as when I saw this. But either way, you’ve now heard it.

Beto O’Rourke

For months, Texas Democrats have failed to field a single serious candidate to challenge Governor Greg Abbott’s reelection bid. But today, Beto O’Rourke is announcing in Texas Monthly that he is entering the 2022 gubernatorial race. The former three-term congressman from El Paso who had run losing bids for U.S. Senate against Ted Cruz in 2018 and for president in 2020, is not expected to face any serious challengers for his party’s nomination. He will seek to become the first Democrat to win statewide office in Texas since 1994, ending the longest statewide losing streak in America for either party.

It will be an uphill battle. Abbott, who has raised more money than any governor in U.S. history, had $55 million in his campaign treasury as of July 15, the last time he reported the size of his war chest. While polling has found that Abbott is not as popular as he once was, O’Rourke’s numbers are worse. A University of Texas poll conducted in October found 43 percent of Texans approved of the job Abbott is doing and 48 percent disapproved, but only 35 percent of respondents had a favorable opinion of O’Rourke against 50 percent who had an unfavorable view.

Running for senate three years ago against a polarizing Cruz, O’Rourke had some success courting moderates: about half a million Texans who voted for Abbott also voted for O’Rourke, and he lost by only 2.6 points. But in 2019, seeking the Democratic nomination for president, the El Pasoan pivoted to appeal to a national base of Democratic primary voters and campaign contributors. He moved left on energy, guns, health care, and immigration, providing the Abbott campaign with an arsenal of provocative quotes it has packed into a preemptive thirty-second digital attack ad, titled “Wrong Way O’Rourke.”

Nonetheless, it would be a mistake to entirely count out O’Rourke, whose 2018 race against Cruz set the high-water mark for a Democratic statewide challenger over the past two decades. Last time he ran statewide, O’Rourke broke U.S. Senate fund-raising records. His campaign refreshed Texas Democrats like nothing else in their long electoral drought, and the turnout he inspired among Democrats and independents helped flip two seats in Congress and a dozen in the state House—though Democrats were unable to add to those gains in 2020.

Also, the past two years haven’t been good ones for Abbott. The state’s pandemic response and the failure of its energy grid in February have brought the governor criticism from both sides. He will face primary challenges from two aggressive candidates to his right: Don Huffines, a former state senator, and Allen West, the former chair of the state GOP.

Should the governor survive those challenges, as expected, the biggest question of his race against O’Rourke will be whether Abbott, in his zeal to keep former president Donald Trump’s endorsement and appease unrelenting criticism from those on the right, cedes some of the center in Texas politics that was once securely his. Over the past year, emboldened by having repelled Democrat advances in 2020, Abbott has proudly signed conservative legislation that would have been unimaginable a few years ago. He signed a law opposed by 55 percent of Texans that allows any resident to carry a handgun without a permit or any instruction, and an abortion bill with an enforcement mechanism, opposed by 57 percent, that allows private citizens to sue anyone they believe helped someone get the procedure.

Texas Monthly spoke with O’Rourke about why he decided to run for governor, why he thinks the race is winnable, and whether he regrets his presidential bid.

Read on for the interview, which is solid. I find it interesting that the stories I’ve seen relating to Beto’s now-confirmed candidacy all mention the UT/Trib poll but not the Texas Hispanic Policy Foundation poll. Y’all need better PR people, THPF. Greg Abbott has been expecting Beto to run, and now it’s all out in the open. Whatever people had been saying about the state of the race before this, it’s very different now.

Everyone and their mom has a story and a take about this now, and that’s both good and likely part of the reason why Beto dragged this out the way he did. There are so many factors to consider at the start of this campaign: The national environment, President Biden’s approval numbers, Greg Abbott’s approval numbers, the previous campaigns Beto has run, and on and on. No one thinks he’s anything but an underdog, but no one would count him out. He may or may not have the primary to himself, and it remains to be seen who will be running alongside him for November. I suspect the next news story we’ll get is that he raised a good amount of money on day one. If we get some stories after that about the freeze and the handling of the pandemic and the unconstitutional vigilante anti-abortion law and so on, that will be even better. I’ve been ready for this stage of the campaign for a long time now. I’m ready for it to move forward from here. The Chron and the Trib and pretty much everyone else has more.

Those pesky high utility rates

Still a problem.

Those of us who lived through Winter Storm Uri have hardly forgotten the experience, of course. But we’ll have a little reminder of it on our gas bills. Every month. For the next decade. At least.

And should we face a similar winter weather disaster soon, as we may, well, that’s all right — any costs incurred then can simply be added to the tab, too.

“There’s a huge moral hazard here,” says Doug Lewin, an energy consultant based in Austin who, like many Texans, sustained serious property damage in February, thanks to a busted pipe.

The Railroad Commission of Texas on Wednesday approved a plan under which the Texas Public Finance Authority will issue $3.4 billion in state-backed bonds to pay back the natural gas suppliers that remained in operation during the February storm.

The move has been in the works for a while. During the crisis, as you no doubt recall, the price of gas soared to historic heights, as utilities scrambled over limited supplies. A Bloomberg analysis found that gas producers reaped $11 billion in profits as a result.

Those costs would have been passed on to consumers directly, but legislators this year passed a measure, House Bill 1520, allowing for the bill to be spread out via the securitization process. As ratepayers, we’re still on the hook for the $3.4 billion, but we’ll pay it back in smaller increments, over a longer period of time; utilities expect the costs for each customer to be roughly $5 a month.

The House Research Organization, in its bill analysis, summarized the argument from supporters: “State policies have been cited as contributing factors that led to the widespread power outages experienced by millions of Texans. Therefore, it would be appropriate for the state to play a role in minimizing the impact of the storm to ratepayers and utilities, including through securitization of certain costs.”

[…]

Industry executives and trade associations have suggested that stronger state action is not necessary because power producers themselves have an incentive to winterize. If they weren’t able to produce during Uri, they missed out on an unusually profitable week. During the course of the storm, natural gas spot prices soared across the country. And the Electric Reliability Council of Texas set prices at $9,000 per megawatt-hour — the highest allowable rate and several hundred times higher than the typical rate — in a desperate effort to get more power on the grid.

But that logic doesn’t really hold up to scrutiny. If every producer had adequately winterized, none of them would have been able to make hay over the situation. From a coldly calculating perspective — if we’re just looking at the heartless logic of economic incentives — the optimal move would be to partially weatherize; that way, in the event of another storm, you would have less product to sell, but at comically higher prices.

“I’m not one of these people who thinks the oil and gas industry is evil or something like that, but they need a clear, strong regulatory signal of what they need to do,” said Lewin. “They are for-profit businesses. If they don’t have a clear regulatory signal, they will follow price signals — and the price signal tells them these kind of events are great for the bottom line.”

“What industry doesn’t like making 11 billion in one week?” he added.

Executives themselves seem content with the current regime. In June, for example, oilman Kelcy Warren donated $1 million to Gov. Greg Abbott’s reelection campaign. His company, Energy Transfer Partners, had its best quarter ever during the storm, raking in an additional $2.4 billion as a result.

We’ve discussed this before. Author Erica Greider notes that this will be an issue in the race for Railroad Commissioner. I hope she’s right, and that it’s more than just in that race. The more we talk about it, the better those chances are.

And it’s not just your heating bills.

Have you looked at retail electricity prices lately?

On the suggestion of readers, I pulled up the state-sponsored marketing site — PowerToChoose.org (beware of imitators) — and it was like I stuck my finger in a wall socket. I was shocked.

For as long as The Watchdog can remember, the opening pages usually highlighted kilowatt hour rates of around 6 to 9 cents.

Now the opening pages show double-digit pricing of 10 cents or more.

Prices of the two dominant players in the market — TXU Energy and Reliant Energy — offer an added jolt.

TXU shows one-year plans for 1,000 kWh around 12 cents. Another listed plan offers a 15.9 cents rate.

On the TXU website, I saw different plans that varied from those presented on the state website. A reminder that with all companies, always remember to check both PowerToChoose and that company’s website.

Reliant shows plans on the state site from 13.4 cents to 15.2 cents for various kWh usage.

[…]

What do Texas experts say about these price jumps?

Ed Hirs, an energy fellow at the University of Houston, says the banning of Griddy, which sold power at wholesale prices, removed a major incentive for retailers to keep their prices down to compete.

He says the increase in natural gas prices we’re seeing is another cause because many Texas power plants run on gas. He blames hurricanes which struck the Gulf of Mexico.

He also blames the Texas government’s bailout allowing companies to recoup billions of lost dollars during the horrific February freezeout through the purchase of $6.5 billion in bonds. Those costs will be passed on to consumers.

When the Texas Legislature sided with companies over consumers, he said, “You know the game is fixed.”

Beth Garza, who served until 2019 as the independent monitor of grid operator ERCOT, said companies selling one-year contracts must anticipate higher prices expected to increase during the length of those contracts.

James Boyle, who once led Texas’ Office of Public Utility Counsel, said: “We all know that what happened in the legislative session is that everybody was taken care of except the home folks. And the consumer pays for everybody else’s mistakes. I think that’s reflected in those prices.”

Kelso King, who runs King Energy Consulting and monitors all Public Utility Commission meetings, warns that still to come is the pass-through to consumers of the multi-billion-dollar bailout for energy companies. That was the solution approved by lawmakers and Gov. Greg Abbott.

King added, “For decades, policymakers kept saying that the great thing about a competitive market was that all of the risks would be borne by generators instead of ratepayers. But when it came down to it, unsurprisingly, end use customers were left holding the bag.”

More fruit of the same tree. I agree that the original appeal to our “free market” in electricity was that providers would bear the risk of price fluctuations, but other than the late and not-really-lamented Griddy that hasn’t been the case. Of course, given the massive effect that big donors have on the system, how can you even call it a free market?

Harris County to pause the I-45 lawsuit

Gonna give talking a try. You never know.

Harris County will pause its lawsuit against the Texas Department of Transportation over the proposed Interstate 45 widening in hopes that it leads to a consensus that has eluded them for more than four years.

The pause, approved unanimously by Commissioners Court at a special meeting Monday, instructs County Attorney Christian Menefee to seek a stay on the lawsuit in federal court as he negotiates with TxDOT to resolve differences between the changes the county seeks to the project and the current plan.

The project, estimated to cost at least $9 billion, would rebuild and widen I-45 from downtown Houston north to Beltway 8, including the freeway’s interchanges with Interstate 69, Interstate 10 and Loop 610 in Independence Heights.

The stay and pause, officials said, would give an opening to officials to work out details of the planned freeway widening without backing off their opposition to what TxDOT is proposing.

“I am willing to consider a pause,” Precinct 2 Commissioner Adrian Garcia said. “Not a dismissal, but I hope that will demonstrate our commitment.”

Menefee said he will ask the court for a stay of 30 days, and then potentially extend that for an additional 30 days if the discussions are “fruitful.”

“The pause is a show of good faith by the county to remind TxDOT that we’re in this to find solutions and address community concerns,” Menefee said in a statement. “We expect TxDOT to work alongside us to achieve the same. If that does not happen, the county will resume the suit and we’ll let the courts decide.”

[…]

Skepticism remains high among project opponents that TxDOT can be a willing participant. Jeff Peters, a member of the Stop TxDOT I-45, said backers consistently have bullied people into accepting their design with the threat of doing nothing if they do not get their way. He urged the county to proceed with the lawsuit, rather than relent.

“This is a critical piece of leverage that can bring TxDOT to the bargaining table,” Peters told Commissioners Court before it approved the pause.

Highway officials, however, have said since March that the federal review and lawsuit leave them no choice but to stop talking. At an Oct. 21 forum sponsored by Transportation Advocacy Group-Houston Chapter, Texas Transportation Commissioner Laura Ryan said the pause by the Federal Highway Administration and county lawsuit were more of an obstacle to open dialogue because they impede TxDOT from designing alternatives.

“We can’t spend money to design and we can’t spend money to do those things,” Ryan said at the forum, which drew criticism because it was for paying guests only at an event sponsored by various engineering, construction and planning firms.

See here for the background. As noted recently, there are other obstacles to the project, though perhaps if Harris County and TxDOT can settle their differences, those can be handled as well. I’m fine with this approach – if there’s a path to meeting the needs of the many people and groups that have been objecting to the design of this project, then sure, let’s go for it – but I wouldn’t get my hopes up too much. There’s already been a lot of time for talk, and I don’t know how much latitude TxDOT has to give. There’s some risk here for Harris County as well, as the opponents of this project aren’t likely to be happy with half a loaf. But hey, lawsuits are time- and resource-intensive, and they often end in settlements anyway, so why not give this a try. You never know.