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Texas Nears Restructuring

March 22, 1999
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Texas Nears Restructuring

Texas moved a step closer to a restructured electricity marketplace last week when the state Senate approved a bill to deregulate electric utilities. The bill is now bound for the State Affairs Committee of the House of Representatives. Hearings could be held as early as March 29. Gov. George W. Bush has voiced his support for electric deregulation.

The legislation would open most of the state's electric utilities to competition -- excluding municipally owned utilities and rural electric cooperatives -- beginning Jan. 1, 2002. Bill sponsor Sen. David Sibley, R-Waco, said deregulation would save consumers between $500 million and $800 million even if they don't switch suppliers as legislation calls for a 5% rate cut when it takes effect. Stranded cost recovery is prescribed through securitization with bond debt being repaid through a transmission surcharge. A similar bill failed to pass the Senate two years ago.

"This is the first time an electric deregulation bill has made it out of either chamber," said Ray Palmer, president of NEV Texas, subsidiary of energy service provider New Energy Ventures. "Texas Senators went out of their way to observe the early workings of other competitive markets first hand, which gave them the opportunity to learn from the challenges already faced in those states and build on the successes of those markets." Joe Fisher, Houston

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