Texas leads the nation in electricity restructuring, overtaking Pennsylvania, according to the latest edition of the Retail Energy Deregulation Index (RED Index), which was released last Monday by the Center for the Advancement of Energy Markets (CAEM). The 2001 index shows that despite California’s well-publicized troubles and the impact of the Enron collapse, the U.S. and Canada continue to make progress on electric restructuring.

The RED Index is a reference tool that measures the progress states have made in moving from the monopoly model of public utility regulation to the competitive model. The index is based on 22 attributes that CAEM has identified as the foundation for an effective transition to competition.

A RED Index score of zero or less represents the traditional set of utility policies, or total monopoly. A score of 100 represents complete and effective implementation of the policies that CAEM believes are the necessary foundation of the customer choice or competitive model.

Texas, Pennsylvania, Maine and New York in the U.S. and Alberta in Canada all have passing scores of 60 or more out of 100. Alberta continues to lead Canada, but a major phase-in of restructuring in Ontario this month will likely propel that province into the top ranks, according to CAEM.

The latest RED Index, the third annual edition of the guide, includes England and several Australian states. “While England has long been recognized as a leader in energy restructuring, the surprise is how much further ahead England is compared to the U.S. and Canada,” said Ken Malloy, CEO of CAEM. England scored 83 out of 100, while the highest U.S. score was Texas’ 69.

“The California crisis and Enron’s collapse raised significant questions about the future of retail electric competition,” Malloy noted. “With all the talk about state retrenchment, we were amazed that the U.S. and Canada continued to make progress on electric competition.

“Everyone wants to know how states have reacted to these events. The RED Index answers that question. It’s the only tool that quantitatively compares states to one another on a standard set of the key attributes of restructuring,” Malloy said.

Texas is now in the spotlight, he pointed out, mainly because it represents a large, new, coherent retail market. “Texas has benefited from its integrated retail and wholesale regulation under one state legislature and one state public utility commission,” Malloy said. “Within the Electric Reliability Council of Texas, the PUC has an opportunity to develop compatible wholesale and retail rules.”

CAEM is a nonprofit think tank founded in 1999 to promote market-oriented solutions to the challenges that confront the energy industry, other network industries and the nation.

For more information on CAEM, contact Jamie Wimberly, president, at jwimberly@caem.org, or by calling (202) 483-4443.

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