PUC delays retail electricity competition in Southeast Texas

By the OGJ Online Staff

HOUSTON, Nov. 1, 2001 — With no alternatives to the regulated electric utility available, the Public Utility Commission of Texas delayed opening Southeast Texas to retail competition until September 2002, 9 months later than called for under the state restructuring law.

This latest delay, plus an earlier decision to hold off on the start of competition in Northeast Texas, circumscribes parts of the state that will actually participate in the competitive market when it opens Jan. 1. Much of the Panhandle and West Texas also will not take part.

While the 1999 electric restructuring law directs retail electric competition to begin Jan. 1, 2002, in areas served by investor-owned utilities, the legislation allowed the PUC to delay full customer choice, if a power region is unable to offer fair competition.

No customers or alternative suppliers participated in the PUC’s pilot program in the Southeast Texas area served by Entergy Gulf States, a utility unit of Entergy Corp., New Orleans, La. The pilot officially opened in late July and was supposed to test the computer systems and the depth of competitive choice in Texas prior to opening the full market to choice.

“All the evidence shows that Entergy customers cannot enjoy the benefits of competition by Jan. 1,” said Max Yzaguirre, PUC chairman. “We must protect their interests and make sure customer choice is available before opening the market.”

The commission also agreed to a plan proposed by Entergy and city officials that would promote competition so the market can open at a future date.

Entergy Gulf States is served by the Southeastern Electric Reliability Counsel (SERC), which has not been certified as a regional transmission organization (RTO) by the Federal Energy Regulatory Commission. Texas law requires FERC to approve an RTO before retail competition can begin.

Uncertainty exists about fair and equal access to the grid for would-be competitive suppliers who must buy electricity to serve customers in Southeast Texas. Competitive retailers would have little choice but to arrange for transmission and generation from the incumbent utility that controls the grid in that area.

The area served by Entergy Gulf States includes the cities of Beaumont, Conroe, Huntsville, Orange, and Port Arthur. City officials complained bitterly to legislative officials and the PUC that opening the market before there was any meaningful choice and deregulating rates would cause economic hardship. They were concerned businesses would have little choice but to pay rates offered by only one company without the safeguards of regulation.

Competition in parts of Texas served by the Electric Reliability Council of Texas is scheduled to proceed in January. ERCOT has been certified by FERC as an RTO that can reliably operate the grid and administer generator access fairly.

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at Jennifer.Runyon@ClarionEvents.com.

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