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 plant.
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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