Providers to take price down a few notches

HOUSTON, TEXAS - Houston natural gas customers will soon be seeing a 5 percent drop in their monthly bills while most Reliant Energy customers can look ahead to as much as $50 in credits on their electric bills.

CenterPoint Energy, the local natural gas company, said beginning this month bills for the average customer will be about 5 percent lower than in September.

A typical customer using 4,000 cubic feet of gas would see their bill fall from $49.43 per month to $47, according to CenterPoint spokeswoman Alicia Dixon.

And Houston-based Reliant Energy said it will give those residential customers on its regulated power plan, known as the "price to beat," two $25 credits on their bills, one in December and one in April.

Even customers not on the price-to-beat plan can get a $50 credit for signing onto Reliant's 2007 Secure Plan, which guarantees a rate 5 percent below the current rate for all of next year. Customers who already signed up and received a $25 credit will get one more $25 credit.

Third decreaseThis will be the third natural gas decrease for CenterPoint, which cut the fuel factor in February and August as gas prices declined.

Reliant's announcement Tuesday coincided with one made by Dallas- based TXU Energy, which said its Dallas-area price-to-beat customers would receive a $100 credit, paid in four quarterly installments beginning in November.

The credits are meant to acknowledge the drop in natural gas prices that has occurred since last year's hurricane-induced price spike. Natural gas fuels more than half of Texas' power plants.

While any price break is good for consumers, Reliant and TXU have been in a position to cut monthly customer bills by anywhere from $15 to $25 for some time, said Tim Morstad, a utility specialist with the Office of Public Utility Counsel, the state's residential utility advocacy agency.

Under deregulation, these incumbent power companies could change the price-to-beat when a certain measure of natural gas prices - an average of the next 12 months futures contract prices - changed by more than 5 percent.

That price has dropped more than 30 percent since its peak last December.

"Discounts help, but rate reductions would lead to bigger savings," Morstad said.

Both companies counter that they have offered customers plans with prices lower than the price-to-beat since the beginning of 2005, but the majority of their customers have remained at the higher rate.

Reliant says 425,000 of its 1.3 million Houston-area customers have switched to non-price-to-beat products.

Retaining customersReliant and TXU officials said they opted for customer credits over rate reductions because the credits deliver a larger savings to customers more quickly. But the credits have the added advantage of helping the two companies retain customers beyond January 2007, when the state officially eliminates the regulated price-to-beat, Morstad said.

"There will be renewed interest in the electricity markets around the end of the year, with more customers likely considering changing providers," Morstad said. "So having the credits spread over time may reflect a strategy of trying to keep hold of customers."

The Reliant and TXU credits may also make price drops by the dozens of other retail electric companies that vie for customers in most of Texas less likely.

In the past when the incumbent power companies lowered the price to beat, competitors would lower their rates a similar amount. But the rebates will make it harder to do an apples-to-apples price comparison for consumers, Morstad said.

"If the price to beat remains super inflated, it leaves in all this headroom for competitors to just remain a few bucks below," Morstad said.

However, that doesn't mean other companies haven't lowered prices before now.

First Choice Energy, an independent retailer in the Houston market, has lowered its rates six times this year, spokeswoman Catherine Carlton said.

Carlton wouldn't comment on whether the company planned to make further reductions but said its largest Houston-area plan follows short-term natural gas prices closely.