The Texas Public Utility Commission last week finalized rules,which among other things, guarantee utility customers get a 6% ratecut when retail competition begins Jan. 1, 2002. The final rulesestablish the price utility affiliates will be allowed to charge.

Under the state’s 1999 electric restructuring law, residentialand small business customers were promised a rate reduction, withadjustments for fuel and purchased power costs. However, the risein natural gas prices since the law was passed made the fueladjustment details more complex because the “price to beat” willdetermine whether new marketers can compete with utility affiliatesuppliers.

The reduction applies to customers who choose the electricretail provider affiliated with their existing utility. PUC expectsthat competing marketers will be able to offer lower rates in manyareas.

The 6% reduction lasts until Jan. 1, 2007, while the affiliatedretail electric providers can offer rates lower than the “price tobeat” beginning Jan. 1, 2005 or earlier if at least 40% ofcustomers move to competitors. To be eligible for the “price tobeat,” the customer’s peak demand cannot exceed 1,000 kW. Municipalutilities and cooperatives are not required to reduce rates fortheir customers.

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