Stranded Costs Projected at -$2.9B to $22B
The Texas Public Utility Commission (PUC) was scheduled this month to consider estimates of retail competition's impact on electric utilities.
A draft staff report, yet to be reviewed by the PUC, estimates stranded costs that span a high of $22 billion to a low of negative $2.9 billion. The 200-page report, The Potential for Stranded Investment in Texas, gives a range of potentially "strandable" costs for each of the state's 15 generating utilities, based on information fed to the PUC's ECOM (Excess Embedded Costs Over the Market Price) model.
The highest estimates involve scenarios in which competition is introduced in 1998 for all customer classes. The lowest estimate derives from scenarios in which competition is introduced in stages by customer class, from 1998 through 2006.
PUC staff also project an "expected value" of stranded investment for each utility. These estimates range from $14 to $3.8 billion.
Ratepayers currently pay these costs in existing tariffs. The draft does not include a scenario in which rates would increase under competition. It does, however, discuss cost recovery that could occur during the transition to competition (em noting that other states will impose recovery via access charges or exit fees.
A 450-page companion report, Scope of Competition in the Electric Industry in Texas and an Investigation into Electric Industry Restructuring, concludes a concurrent year-long PUC assignment mandated by the Texas legislature.