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The Electric Competition Debate in...Texas

Fortnightly Magazine - May 15 1998

reduction if the Legislature doesn't pass a restructuring bill during the 1999 session.

The two other pending rate cases that have transition provisions include those for Entergy Gulf States (Docket No. 16705) and Texas-New Mexico Power Co. (Docket No. 17751). TNMP has proposed a date for retail competition; Entergy has not.

Karina Casari, director of the Senate Interim Committee, says the PUC's actions are somewhat irrelevant. "I think we're supportive of the commission trying to get some of those stranded costs paid off. But in terms of the threshold question of whether we should restructure or not, I don't think it affects it at all.

"I think it's obvious to everybody that rates are going to come down one way or another," she says. "We can do it through a regulatory environment or we can do it through a market-based solution that allows competition and that squeezes [rates] down. That doesn't necessary mean we would give a rate reduction through the bill. But I think one way or another, there is room for rate reductions."

Sen. Sibley has said that unless residential rates are cut 15 to 20 percent, there's no point in having competition. Suzi Ray McClellan Office of the Public Utility Counsel has come out in support of transition plans offered by TU and HP&L, partly because the two companies have promised to support retail competition, beginning in 2001, as a condition in their rate cases. Much was accomplished, she believes, and "we didn't incur $15 million in rate case expenses."

McClellan says whatever legislation that comes out of the Interim Committee is likely to be molded by its chairman. "Sibley is actually so powerful in our Senate that whatever he puts his stamp on it would probably be the bill that would be the focus of the discussion," she says.

Casari says the transition plan doesn't tie the committee's hands behind its back: "Not at all¼ The committee's most important question before them is: Should we restructure or not?"

Wood says it's obvious to him action needs to be taken.

"Well, hell, we need a bill passed," says the PUC chairman. "A bill that allows people, competitors, to get in a market and customers to have open access. No, we need some real critical things done."

Even if Sen. Sibley delays action, "that's fine," he says. "Our job is to make sure that all the miscellaneous points are kind of cleaned up so they can make a decision based not on, 'Oh we've got so much more work to do,' but, 'Oh, this is a good policy for Texas.'

"The IOUs have come around. The CP&L case kind of woke them all up as to what regulation would look like. I view the CP&L case as just the opposite. [CP&L] is what the world looks like if we don't deregulate."

Dan L. Jones, the PUC's chief policy analyst, notes that TU and HP&L ironically have come forward with plans "pretty consistent" with the governor's bill. He says the transition cases may prove that it's possible to reduce rates and