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Texas Mulls In-Kind Power Generation

Texas Mulls In-Kind Power Generation

Texas Land Commissioner David Dewhurst last week presented a plan to a special senate committee on electric utility restructuring that would allow the land commissioner to convert the state's oil and gas earned from public lands into electricity and sell it to Texas schools, state agencies, and local governments.

"The money the state makes from its public lands is constitutionally dedicated to education," Dewhurst said. "This plan could reduce the operating costs of some of our schools and government agencies - and at the same time increase the earnings for our school funds by 30%." Dewhurst said in-kind royalty payments raised almost $140 million for the state's Permanent School Fund and Permanent University Fund in 1998. He said his plan could dramatically increase that amount.

Dewhurst's plan is not the first time the idea has been suggested. Previous land commissioner Gary Mauro also suggested the idea, and former lieutenant governor Bob Bullock made the suggestion several years ago.

If Dewhurst's plan were adopted, Texas would ship gas and oil from state-owned lands to independent power producer plants where the fuel would be converted to power. The plan would allow the state to generate power at a below-market price and sell it to schools and state agencies below what they currently pay. Texas has accepted in-kind royalty payments for its share of oil and gas production from state lands since 1973.

Joe Fisher, Houston

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