Texas PUC calls for gas act overhaul

Reliant Energy Inc. and TXU Corp. could have an unfair advantage over competitors through their ownership of natural gas distribution companies when electricity competition begins in Texas in 2002, say state regulators.

The Texas Public Utilities Commission (PUC) recommended lawmakers amend the Gas Utilities Regulatory Act to prevent "development of a potentially anticompetitive situation involving affiliated natural gas utilities and electric utilities" in its annual report to the Texas Legislature.

Such an amendment would need the blessing of the Texas Railroad Commission which oversees Texas gas matters. Terry Hadley, a PUC spokesman, said the staffs of both agencies have held preliminary talks.

The change is needed because TXU purchased Enserch and Reliant bought Entex, two of the state's largest natural gas local distribution utilities, in the last few years, according to the PUC.

As a part of the unbundling required by SB 7, incumbent electric utilities such as TXU and Reliant will create affiliated electric retailers and these two natural gas utilities will also be affiliated with the electric retailer, the PUC says.

When these companies create retail electric suppliers as a part of the unbundling process, state regulators say their ability to combine gas and electric billing or service may make it more difficult for other electric retailers to compete.

The PUC says it is also possible the affiliated electric retailer may be able to directly provide gas by rebranding the gas service under its own name.

In either case, the customer, if he chooses the electric retailer that is affiliated with the local gas distribution company, will be able to get one bill for both his gas and electric service. The PUC said this may give an unfair advantage "to two companies that are incumbent utilities and are affiliated with gas utilities."

As a solution, PUC suggests adding a provision to the Gas Utilities Regulatory Act that requires local distribution companies to offer combination billing or rebranding to all electricity retailers on the same terms and conditions that it does for its affiliated retail electric provider.

Because legislative committees have just begun convening, Hadley said, no formal legislation to amend the existing law has been introduced. The matter is still in the discussion stage, he said.