Cap Rock Energy Files Rate Case
February 25 2004 - 6:51PM
PR Newswire (US)
Cap Rock Energy Files Rate Case MIDLAND, Texas, Feb. 25
/PRNewswire-FirstCall/ -- Cap Rock Energy Corporation today
announced that in response to an order from the Public Utility
Commission of Texas ("PUCT") it has submitted a rate filing package
to the PUCT. The rate filing contains an application for a rate
increase. The PUCT order compelled the filing of the application
for a rate increase much earlier than the Company had originally
anticipated. This was due to recent action by the Texas Legislature
which brought the Company under the regulatory authority of the
PUCT for rate purposes. This special legislation was sponsored by
Senator Troy Fraser and heavily supported and advanced by St.
Lawrence cotton farmers Harold Hoelscher, Rodney Gully, Glen and
Mary Marechek, and County Judge W.E. Bednar, among others, as well
as the St. Lawrence Cotton Growers Association, the Texas Electric
Cooperative Association, the Texas Cotton Ginners Association, and
the Texas Farm Bureau. The Public Utility Regulatory Act ("PURA")
originally provided for Cap Rock to be regulated as an electric
cooperative and have its rates set by its Board of Directors. In
2003 the aforementioned individuals and special interest groups,
along with others, launchedan aggressive campaign to change the
PURA and they were successful in passing Senate Bill 1280 which was
signed into law on June 22, 2003. S.B. 1280 provided for Cap Rock's
rates to be set by the PUCT effective September 1, 2003. During
those proceedings Cap Rock leadership testified that the result of
such regulation would be an increase, not a decrease, in rates.
Prior to the passage of S.B. 1280, Cap Rock had operated using
rates set by its board of directors who utilized independent
third-party studies in analyzing and setting rates. Because
regulatory costs are passed on to ratepayers, this process was very
economical and avoided the extremely high cost of the rate filing
process and ongoing cost of regulatory compliance. This more
efficient model also avoided any significant regulatory lag cost.
Prior to S.B. 1280, Cap Rock was positioned to save the ratepayers
millions of dollars. In 2002, Cap Rock converted from an electric
cooperative to a shareholder owned corporation. As part of the
conversion, Cap Rock's then current and former members had the
option of receiving payment of their ownership interest in the
cooperative by electing to receive cash, credit on their electric
bill, if they were a current customer, or stock in the new company.
"We were very pleased that the vast majority of our former members
elected to take stock and remain shareholders to this day," stated
David W. Pruitt, President/CEO and Co-Chairman of the Board. "Our
stock began trading on the American Stock Exchange on March 14,
2002. The stock was issued at $10 per share. It is now trading at
over $32. We are extremely proud of that." After taking cash,
electricity credit and even stock, a very vocal minority group of
wealthy irrigation farmers began attempting to "unwind" the
conversion. This group constituted less than 1% of our customers.
Ironically, they never proposed how they would return the money,
credit, or stock they received as part of the conversion. As
leverage, they intervened in Cap Rock's application to transfer the
"Certificate of Convenience and Necessity" or its license to
operate. This group was unsuccessful in this effort, but delayed
the process for over two years and cost Cap Rock, and hence its
customers, millions of dollars. Simultaneously this same group and
others who they were able to enlist began efforts to change the law
and have Cap Rock's rates set by the PUCT. Desiring to have all
other customer classes subsidize lower rates for them, they adopted
the mantra "Regulate Cap Rock." They were successful in these
efforts and, as Cap Rock had predicted, the result will be higher
rates for all Cap Rock customers. Cap Rock's rate filing vehemently
opposes subsidizing any particular customer class. Its
proposedrates are based on the cost of providing services to its
various rate classes and a fair rate of return on the investment
required to provide that quality service. "We will not be
intimidated by this small group of wealthy and powerful irrigation
farmers," stated Mr. Pruitt. "Our rates are going to have to go up,
but we are trying to keep them as low as possible. These special
interest groups want to use this rate inquiry to change our rates
and penalize our other customers. We are going to protect our
residential and small business customers from the bullying tactics
being used by these special interest groups. Frankly, it would be
easier and less expensive to give in to this special interest group
and reduce their rates while increasing the rates of people who
have far less ability to fight and garner political support.
However, that would not be the right thing to do. We will do the
right thing and we expect to prevail. Our customers, shareholders
and employees expect nothing less." Cap Rock Energy provides
electric distribution services to over 35,000 meters in 28 counties
in Texas. Its corporate office is located in Midland, Texas, with
service divisions in Stanton, Colorado City, Brady and Celeste,
Texas. The Company also provides management services to the
Farmersville Municipal Electric System. The Company's predecessor,
Cap Rock Electric Cooperative, Inc., was incorporated as an
electric cooperative in the State of Texas in 1939. Cap Rock Energy
Corporation is the first electric cooperative to convert to a
publicly held corporation and the first electric utility to become
a public company in over 60 years. All statements, other than
statements of historical fact included in this news release are
forward looking statements as that term is defined in the Private
Securities Litigation Reform Act of 1995. Any such forward looking
statements involve risks and uncertainties and actual results,
performance or achievements of Cap Rock Energy may be different
from those expressed or implied in the forward looking statements.
DATASOURCE: Cap Rock Energy Corporation CONTACT: Ronnie Lyon of Cap
Rock Energy Corporation, +1-903-813-0377, or
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