Texas Orders Rate Cuts; Legislation Unlikely to Pass

Fortnightly Magazine - May 15 1997
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In the first order under a 1995 law designed to increase competition in the electric wholesale market, the Texas Public Utilities Commission ordered Central Power & Light Co. to cut rates.

DC PSC RFP Technical Consultant for Formal Case (FC) No. 1156

Meanwhile, Moody's has predicted that legislation introduced in the Texas Senate and House giving choice to small ratepayers is unlikely to pass.

Rate Cut. On March 31, the PUC ordered a $32.3-million rate cut for Central Power & Light Co. retroactive to May 1996. An additional $16.4-million rate cut must be implemented annually in 1998 and 1999 (Docket No. 14965).

The 1995 legislation has led to a marked decline in prices power paid by utilities. In the Central Power & Light rate decision, the PUC decided that firm customers should benefit from those declining costs. Hence, the use for the first time of a downward "glide path" methodology for rates, which sets rates to capture depreciation and efficiencies. The further reductions, effective in May 1998 and May 1999, would allow customers to benefit from declining book values. The glide path further establishes an additional 1.95-percent decrease for firm customers in 1998, and an additional 2-percent decrease in 1999.

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