Texas PUC Enacts Power Auction Rules
Dismissing the criticisms of a few of the expected competitors
in Texas' coming deregulated electricity market, the Public Utility
Commission has adopted rules that require affiliate power
generation companies unbundled from current integrated utilities to
sell entitlements to their power generation. PUC said the rules
would benefit electric customers by proving a more competitive
wholesale market when it begins Jan. 1, 2002.
PUC adopted rules that will require the state's resident
utilities to auction a certain amount of generation to competitors
- but not the utility's retail affiliate. The utilities also will
be separated into generation, retail and transmission and
Specifically, Senate Bill 7, the electric restructuring bill
passed by the Texas Legislature last year, requires the power
generation company of each unbundled investor-owned utility to sell
entitlements to at least 15% of its installed generation capacity.
The new PUC rules establish the scope of entitlements and how
auctions will be handled for affiliated power generators to sell
The four types of capacity products will be auctioned that
represent energy production over periods from one month to two
years. Capacity entitlements will be sold for the period of Jan. 1,
2002 through Jan. 1, 2007, or until 40% of the residential and
small commercial electricity use within the affiliated transmission
and distribution utility's area is provided by new competitive
retailers. Only utilities that own less than 400 MW of installed
generation capacity are exempt.
An open bidding process is required under the new rules, and
will be conducted over the Internet by the auctioning generator.
The rules also explain how a generator will designate the quantity
of the different products to be offered, and how opening bid prices
are established. The Texas PUC designated Sept. 1, 2001 as the
cutoff for the first auction, with subsequent auctions four times a
Several companies voiced objections to the new rules, including
AES NewEnergy, a subsidiary of AES Corp., and Enron Energy
Services, a subsidiary of Enron Corp. However, PUC, utility
affiliates and large wholesale marketers and traders supported most
of the language in the rules.
To review the rules, visit the PUC website at
Carolyn Davis, Houston
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