Texas to launch electricity deregulation

AUSTIN, Texas, Dec. 31 (UPI) -- Amid the rubble of California's bungled attempt at electricity deregulation and this fall's failure of energy trading giant Enron Corp, Texas on Tuesday begins the country's largest attempt to deregulate the electrical industry.

The Texas Legislature approved the sweeping Texas Electric Competition Act, which was signed by then Republican Gov. George W. Bush on June 18, 1999. The state's electric companies have been gearing up for the Jan. 1 implementation for seven months, with the opening of the Electric Reliability Council of Texas, the organization, which will implement deregulation.

"We have spent the last seven months testing the system and making sure it was ready," said Thomas E. Noel, chief executive officer of ERCOT. "We completed testing all market participants in late November and everyone passed, and everyone has been 100 percent certified."

He says all requirements set by the legislature, by consumer groups, and by the electric utilities themselves have been met.

"At the last legislative oversight committee meeting, it was basically unanimous to move ahead. There were no people there arguing that we not move ahead."

Deregulation, which is officially called "restructuring" in Texas in light of California's problems, basically allows residential and commercial electric customers to choose their electricity provider, much as customers now choose their telephone service provider. Municipally owned utilities, like San Antonio City Public Service and Austin Electric, are exempt from the measure, but Noel expects the city councils, which manage them to sign on within a year.

"You can make a phone call or return a post card indicating that you want to change your electricity provider, and at your next regularly scheduled meter read, somebody else will come in to read your meter, and that becomes the ending read for your old supplier, and the beginning read for your new supplier," Noel said.

Noel expects Retail Electric Suppliers, or RET's to use price as an incentive for customers to switch, he predicts residential electric rates to drop 17 percent in the first year in parts of the state like Dallas, where electric utilities are investor-owned, and the market is totally deregulated.

Officials say a customers' "home" utility will still be required to maintain the lines bringing electricity into buildings, repair outages caused by accidents and bad weather, and provide other services, regardless of whether the homes and businesses serviced are consumers of the utility's power.

"That will still be regulated," Noel said.

Texas officials stress there are several major differences between our experiment with electricity deregulation and the one which led to blackouts and skyrocketing electricity costs earlier this year in California.

"They prepared some two years to get ready for deregulation, and frankly, they were not ready," Noel said. "We studied the issue for seven years and went at it much more deliberately."

The Texas restructuring effort is much more aggressive than the one in California. Texas also enters the brave new world of deregulation with a 20 percent daily surplus of electric power, while California was a net importer of electricity, placing that state at the mercy of out of state suppliers like Houston-based Enron.

The biggest hurdle deregulation may face is convincing customers to change. During a pilot program late in 2001, the Public Utility Commission says only one third of those eligible opted to change electricity providers.