Naked City

"We have a situation where we have an entity that walks and quacks like a duck but wants to be treated as something different." That's how Public Utilities Commission Chair Rebecca Armendariz Klein described the proposal of Cap Rock Energy, which serves about 17,000 customers in the Midland area, to become the first utility in the state to transform itself from a nonprofit electrical cooperative -- whose customers own the utility company and elect its board members -- into a privately held corporation, beholden only to its shareholders. Rather than immediately approve the plan, the PUC has asked the attorney general for an opinion on whether the arrangement will be legal.

Cap Rock's proposal to become a duck masquerading as a chicken -- or more precisely, a wolf pretending to be a sheep -- would not have made a media ripple but for the inconvenient coincidence that the 1999 enabling legislation for the metamorphosis was sponsored by none other than the new House speaker-in-waiting, Midland's own Tom Craddick. (R.A. Dyer of the Fort Worth Star-Telegram broke the story Nov. 16.) It didn't help matters that Craddick's daughter, Christi, was Cap Rock's designated lobbyist on the amendment that would give Cap Rock freedom to set its own rates as though it remained an investor-owned utility, while simultaneously granting it protection from competition. No other investor-owned utility in the state enjoys those protections. Craddick defended the amendment as benefiting ratepayers, and in the ensuing flap, Christi Craddick has announced she will no longer lobby the Lege as long as Dad is speaker.

Clarence Johnson of the state's Office of Public Utility Counsel said Cap Rock has ongoing financial problems due to mismanagement and self-dealing, and that the freedom to set its own rates could end up gouging its customers. "I would be hard-pressed to find any redeeming quality from the ratepayer standpoint," Johnson told the Star-Telegram. "This appears to be inconsistent with virtually any form of public-utility regulation or rate setting that is practiced in the United States."