More doubts surface over competition in parts of Texas

Ann de Rouffignac
OGJ Online

AUSTIN, Oct. 3 -- Doubts resurfaced Tuesday over whether Northeast and parts of Southeast Texas will be ready for electric competition in January 2002, when retail choice is scheduled to begin in most of the state.

To date no companies have offered to sell electricity to residential or industrial consumers in those areas.

"Entergy and SWEPCO [Southwestern Electric Power Co.], are a barren wasteland compared to ERCOT [Electric Reliability Council of Texas]," said Stephanie Kroger, an attorney with Mayor Day Caldwell & Keeton LLP, Austin. "Industrial customers put out RFPs [requests for proposals] and got no bids, absolutely no response."

SWEPCO and Entergy Gulf States Inc., a unit of Entergy Corp., New Orleans, are the regulated utilities serving the areas where competition appears to be having a hard time getting off the ground. They are not in the ERCOT control area. The problem was addressed at the Gulf Coast Power fall conference in Austin.

SWEPCO said it supported a delay in competition until March 2003. Entergy Gulf States, on the other hand, still supports opening the market in January 2002.

David Cruthirds, an attorney with Dynegy Inc., Houston, said moving power into and out the area served by Entergy in Texas is difficult. That means the number of electricity suppliers would be retailers have to choose from is limited, he said.

"I like the people at Entergy. But their transmission system is pretty crappy," he said. "How can they forget they have 20,000 Mw of generation when making transmission decisions?"

Entergy doesn't belong to a Federal Energy Regulatory Commission approved regional transmission organization (RTO). Texas' restructuring law requires that utility subject to deregulation operate within a region where fair and open transmission access can be guaranteed. The US Supreme Court is scheduled to hear arguments Wednesday in a challenge to FERC Order 888 that required utilities to provide open access to transmission systems.

"Entergy is committed to retail competition in Texas," said Jack Blakley, director, regulatory affairs, Entergy Gulf States. "We are on track to implement competition in Texas. Our systems are ready, but there are no customers participating. This is out of our control."

Blakley conceded Entergy will not be a member of a FERC approved RTO by the first of the year. But, he said, Entergy will pay a third party to calculate the costs of congestion, monitor the market, and review billing and settlement processes.

"We would like the market participants to have confidence in the market structure," he said. The PUC is set to hear evidence Friday in a contested hearing on whether to delay competition in both areas, said Lino Mendiola, attorney for Mayor Day Caldwell & Keeton.

Conference participants said it isn't clear if FERC or the PUC is in charge once deregulation begins in the parts of Texas not under ERCOT control. "If rates go way up, it appears there is no way for the PUC to reregulate," he said.