Texas Legislators Want Stranded Costs Refunded
Legislation that could give Texas electric customers substantial
refunds because of "unintended windfall" profits made through the
coming deregulation of the state's utilities is making its way
through the Texas House. Under the current law, large utilities may
keep earnings made through 2004 to offset the costs of investing in
nuclear power plants.
However, the nuclear plants, which were considered an
unprofitable source of electricity when the 1999 deregulation law
was passed are now more valuable because the cost of fuel has not
gone up while natural gas costs have risen. Rep. Sylvester Turner
(D-Houston) said HB 2107, which he is co-sponsoring with Rep. Kevin
Bailey (D-Houston), would require the Texas Public Utility
Commission to return the money to cover the stranded costs to those
nuclear plants next year.
Even though state lawmakers crafted the deregulation law to
cover unforeseen events, last month current PUC Chairman Pat Wood
III said that the legislature should address the changing market
conditions and advise his commission about how to deal with
stranded cost collection.
At a news conference last week, Turner said that because the
market has changed, "companies don't deserve to keep this money."
He said it was "past time for a refund."
Even though nuclear plants are competitive now, Houston-based
Reliant HL&P officials believe it could be a temporary
situation. While nuclear and coal plants are competitive now,
Reliant said that the value is only an estimate. The true test,
said Reliant, would come if a utility tried to sell a nuclear
Texas' deregulation does not officially begin until January
2002; however, utilities involved in a pilot program have begun a
sign-up program, which will begin in June. The pilot program is
designed to reach 5% of the state's current electric customers.
Carolyn Davis, Houston
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