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Houston electric company is fourth to fold

AUSTIN -- Yet another financial failure by a Texas electric company means thousands more ratepayers will likely get dumped into high-cost default service, according to a regulatory spokesman.

The company, Riverway Power of Houston, had earlier filed for bankruptcy, but continued operations.

However, a Houston bankruptcy court on Tuesday dismissed the bankruptcy case, meaning that as many as 6,500 Riverway customers will likely be shifted to high-cost default providers, according to a spokesman for the Texas Public Utility Commission.

Customers going to those high-cost providers could see a substantial increase in their bills, typically must pay deposits to keep their lights on, and face extra charges if they want to quickly get off the default service to go with a company offering better rates.

Riverway is the fourth electric company in as many weeks to have failed to meet its financial obligations and have to dump customers to the high-cost default companies, which are known as providers of last resort or POLRs. Other companies that have failed are PreBuy Electric of Bridgeport; National Power of Houston; and Hwy MHP 3 of Denton.

As a result of the market failures, more than 35,000 customers have been switched to high-cost default providers or other electric companies. At least 9,000 of those customers are in North Texas.

Now, add to those numbers the thousands of former Riverway customers. It remains unclear how many of those customers are in North Texas. A company spokesman could not be reached for comment.

Operators of the Texas power grid earlier were preparing to shift Riverway's customers to high-cost default electric service, but stopped that process after Riverway came under the court's protection. PUC spokesman Terry Hadley said that grid operators now will renew that process.

Hadley also noted that Riverway was earlier sanctioned by the PUC for allegedly reneging on fixed-rate deals with its customers.

In recent days, prices on the wholesale electricity market have spiked to some of the highest levels in memory. The commodity price of natural gas, which is used to fuel many electric plants, also has reached historic levels similar to those seen in 2005 after Hurricanes Katrina and Rita disrupted Gulf Coast production.

Some analysts are blaming those spikes and skyrocketing wholesale prices for the recent tumult in the retail electric market.

The operator of the Texas power grid, the Electric Reliability Council of Texas, recently adopted a series of technical changes that it hopes will bring some stability back to the market.

State Rep. Phil King, a Weatherford Republican whose committee oversees utility matters in the Texas House, also has suggested providing relief to customers shifted to default providers by temporarily tapping money earmarked for energy-efficiency efforts.