Bloomberg - consumers were supposed to get lower electricity rates from deregulation. Instead, they pay some of the nation’s highest prices, partly because of bonds Goldman Sachs Group Inc. (GS) recently sold for a local utility.
The Wall Street bank marketed $1.7 billion of securities for Houston-based CenterPoint Energy Inc. (CNP) last month at higher yields than most of the company’s similar long-term debt, according to data compiled by Bloomberg. That raised costs borne by 2.2 million Houston-area consumers by about $47 million.
The sale shows how deregulation in Texas backfired, driving up costs for those promised savings. Texans paid some of the lowest rates in the country before the changes, according to the U.S. Energy Information Administration. Now they pay the fifth- highest electricity prices. The policy shift toward competition has also misfired in other states including California.
“This whole thing has been tragic for ratepayers,” said Thomas Brocato, a lawyer in Austin for the Gulf Coast Coalition of Cities, a group of 34 municipalities served by CenterPoint, whose share price beat the Standard & Poor’s utilities index by about 2-to-1 in the past year. The bond issue’s cost “makes it still worse,” he said.
Began in 2002
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