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Regulators Forum: Restructuring Rollback

State-policy turmoil reshapes utility markets.

Fortnightly Magazine - November 2007

Volumetric sales are culturally embedded in our retail-electric market. Advanced-meter deployment may be a catalyst for helping the retail provider find self-interest in rolling out products that are value added rather than volumetric.

Fortnightly: Are novel rate structures being presented to you for consideration?

Hudson: In customer-choice areas of our state, customers can choose among products with variable-rate, indexed-rate, fixed-priced term, and generation-source specific products, including renewable energy. As advanced meters are deployed, we expect to see some retailers develop time-of-use products.

In areas of our state that are vertically integrated, we are entering a rate case now where a competitive-generation tariff has been proposed allowing direct purchase for large industrial customers. This same rate case has some novel elements related to low-income assistance as well.

Fortnightly: What are the implications of Texas’ price-to-beat mechanism ending?

Hudson: It’s time for every single Texas customer to protect their interests by becoming informed and engaged on electricity, a product that is central to our modern lifestyle. Retail prices no longer have an artificial benchmark to price against, so we trust retailers are slugging it out in the market every single day—searching for that price, that innovation, that product, that service level that will give them an advantage in gaining customers.

In Houston and Dallas more than 25 residential providers are vying for residential customers. Incredibly, these providers are offering 90 or more products. While both numbers seem unsustainably large, it will be for the market to sort that out.