Joint Electric Utility Restructuring Legislative Oversight Committee Hears Public Testimony

AUSTIN - The Joint Electric Utility Restructuring Legislative Oversight Committee held a public hearing today, September 26, 2000, at the State Capitol. The committee was created by Senate Bill (SB) 7 during the 76th Legislature - Regular Session. Its members are overseeing the implementation of SB 7, the electric utility restructuring bill, and monitoring its effectiveness. Under SB 7, the electric utility market will be opened to competition by January of 2002. From that date on, customers served by investor-owned and other qualified utilities will be able to choose their retail electric provider.

Advocates of the oil, gas and electricity industry testifyed, as well as advocates for consumers. Industry representatives explained to committee members that funding for new drilling in Texas is not available Differences between propane, butane and natural gas, as well as the effects of the severance tax on these industries were also discussed.

Representatives of electric utilities assured the committee that problems seen during the deregulation of electricity in California will not be repeated in Texas . They say the primary cause of power shortages in California is that the generation capacity has remained flat, while the population and the economy have boomed. They say this is not the case in Texas, because many generation plants have been build in recent years. Since 1995, 22 new power plants have come on-line in the state, with another 15 plants under construction. The new plants should be ready by the time the market opens to competition in 2002. An additional 33 more plants are being planned.

Consumer advocates discussed consumer, anti-discrimination and environmental protection concerns. To protect consumers, the Legislature passed strong measures for the transition to a fully competitive market. The "price-to-beat" mechanism included in SB7 was designed to keep customers from seeing their electric bills double or triple, as it has happened in California. Most residential and small commercial customers will see their rates automatically drop 6 percent on January 1, 2002. This "price-to-beat" will stay available for at least five years through their current providers. Competitors will be a able to offer even lower rates than these for customers who shop around for electricity. Consumer advocates will keep a close watch to the development of the open market, and offered to work with the legislature during the next session.

The joint committee includes five members of the Texas Senate appointed by the lieutenant governor, and five members of the Texas House of Representatives appointed by the speaker. The committee is chaired by Waco Senator David Sibley and Dallas State Representative Steve Wolens, co-authors of SB 7. Members include Senators David Cain of Dallas, Frank L. Madla of San Antonio, Jane Nelson of Flower Mound, and John Whitmire of Houston; along with Representatives Kim Brimer of Arlington, David Counts of Knox City, Debra Danburg of Houston, and Sylvester Turner of Houston.

The Joint Legislative Oversight Committee on Electric Utility Restructuring stands recessed subject to the call of the chairs.

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