Texas electric deregulation pilot program won't begin until July

by Charlene Oldham

When it comes to implementing the state's deregulation pilot program, Tom Noel would rather be perfect than punctual. Mr. Noel, CEO of the Electric Reliability Council of Texas, and others with the agency that manages the state's electric grid decided in May to delay the beginning of the pilot program. The change means Texans who chose to leave their incumbent utilities during the pilot -- originally scheduled to begin June 1 -- won't start getting service from new retail electric providers until July 6.
Under the pilot program, about 5 % of the state's residential ratepayers have the chance to choose their electric provider for the first time in a century. Also, the state's "investor-owned utilities" -- companies such as TXU's TXU Electric -- are able to compete outside their existing service areas for the first time. The pilot will end Jan. 1, when most other Texans can choose another electric provider.

Mr. Noel said regulators decided to delay the pilot because they wanted to be certain the system was ready for the switch from 10 regional power controls to a single control system that should help deregulation run more smoothly. "We just wanted to make sure we were on firm footing before we took the next step," Mr. Noel said.
The grid operator is on solid ground now, Mr. Noel said, and officials expect the system will be able to handle about 21,000 customer switches a day by July 6. It's been switching a limited number of customers to new retail electric providers since June 1 to test systems. Most will receive the first bill from their new provider in August or September. "Let me say we're in good shape, but it's not a slam dunk," he said.
"We have been making excellent progress, though." Consumer advocate Carol Biedrzycki isn't surprised by the new schedule. The 1999 state deregulation law may have set unrealistic, or even impossible, goals for the grid manager, she said. "I think they just needed more time than was allotted by the Legislature to get the system up and running," said Ms. Biedrzycki, executive director of Texas Ratepayer's Organization to Save Energy.
"Legislative deadlines sometimes ignore technical concerns." Texans are still signing up for the pilot program despite the delay, said Connie Corona, pilot program coordinator for the Texas Public Utility Commission. She expects sign-up rates will increase as consumers start getting their summer electric bills and the PUC picks up the pace on its public information campaign. "I'm slightly surprised that sign-ups continue to be steady despite the fact there is a lull in our education campaign," she said.

Sign-ups are steady but slow. The PUC had expected commercial customers to fight for a spot in the pilot, which will also allow up to 5 % of the state's commercial users to choose new providers. So far, those slots aren't all taken, and Ms. Corona said some commercial customers might wait until Jan. 1 to make the switch.
At the same time, just 73,303 of the state's 261,000 eligible residential customers have decided to abandon their investor-owned utility since enrolment for the pilot opened Feb. 15. Ms. Biedrzycki, who serves as the consumer advocate in a PUC working group on the pilot program, said ratepayers are reluctant to switch to a new provider that saves them just a penny or two per kW hour. She's seen similar patterns in other deregulated states. "It's always been my belief that residential customers don't really have an interest in switching retail electric providers to save a few cents," she said.