Texas pilot attracts business; consumers hanging back

By Ann de Rouffignac
OGJ Online

HOUSTON, Mar. 20�The pilot program to test the competitive electric market in Texas is getting started with a bang for business and a whimper for consumers. The pilot is set to start June 1 and retail providers are marketing to potential customers now in the utilities� service territories.

Interest is so strong among business customers that utilities will conduct a lottery Wednesday to choose pilot program participants. But participation is sparse, so far, among residential consumers and in some areas of Texas nonexistent, according to data from the Public Utility Commission of Texas.

Participation in the pilot program is limited to 5% of each customer class served by investor-owned utilities in Texas. Full competition in Texas is set to begin on Jan. 1, 2002.

According to data compiled by the PUC, industrial customers signed up load representing 694% of the goal in Reliant Energy Inc.'s Reliant Energy HL&P�s territory and 757% of the goal in TXU Corp.'s TXU Electric Co.�s territory. Also, more industrial customers have volunteered for the pilot in Central Power & Light Co.�s territory than allowed.

Commercial customers are also clamoring to be in on the pilot. More businesses have volunteered to switch than the program can accommodate for TXU and Reliant.

�We expected these classes to be oversubscribed,� said Janee Briesemeister, senior policy analyst at Consumers Union in Austin. �We knew that deregulation is all about benefiting large customers.� Briesemeister explained marketers and other electric providers can compete more easily for large customers compared to residential consumers.

�In Texas, as in other states, it is easier for marketers that serve business and industrial customers to produce profit for themselves and savings for business. There is more money to be made by serving a few large customers,� she said.

Few consumers, however, have opted to participate in the pilot program thus far, except in Reliant�s territory. Of 75,133 consumers eligible to participate in the pilot in Reliant's territory, 15,676 customers have switched providers.

In TXU Electric�s territory, only 6,427 out of a possible 113,295 customers have made a move so far. Only 146 of a possible 7,963 customers served by Texas New Mexico Power Co. have switched.

No customers have opted to participate in the pilot program in all other service territories of the other investor-owned utilities, according to the PUC data.

The PUC provides a comparison of prices for potential shoppers of electricity in the pilot program on the internet. The savings are miniscule, if the prices posted on the website reflect what consumers would save, if they switched providers.

In Reliant�s service territory, the average price for usage of 1,000 kw-hr is 10.13�/kw-hr. Shell Energy, a retail unit of Shell Oil Co., offers electricity at 9.5�; The New Power Co., 9.69�; and First Choice Power Inc., 9.5�. Savings on usage of 1,000/kw-hr/month translates to about $4.44-$6.63/month.

In TXU�s territory, competitors' prices are actually higher than the incumbent utility's for 1,000 kw-hr. Only the New Power Co. offers any savings. That company is offering electricity to TXU customers at 8.2�/kw-hr or a savings of about $6/month.

Pat Wood, chairman of the PUC, is confident that competition will be beneficial though.

�Competition should result in lower prices, and based on what we�ve seen in other industries that have recently deregulated, competition should lead to the development of a host of new products and services for customers,� he said in a release.

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