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Rebellion brewing over electric competition in east Texas

With elected officials at loggerheads, a rebellion is brewing in east Texas over whether retail electric competition should go forward in that region, along with most of Texas in January.

City governments in the region, some state legislators, and Lt. Gov. Bill Ratliff (R-Mount Pleasant) urged the Public Utility Commission of Texas to delay competition in Entergy Gulf States Inc. and Southwestern Electric Power Co.’s (SWEPCO) service territories. They blamed an apparent failure of a pilot competitive program in that area that drew no takers.

Other state legislators, including Sen. David Bernsen (D-Beaumont) and Rep. Allan Ritter (D-Nederland) plus the utilities, called for competition and the sale of utility generating capacity to move forward. “It is my sincere desire to see competition begin in southeast Texas as it does for the rest of the state at the same time,” said Bernsen in correspondence with the commission.

Ritter said the suggestion electricity restructuring is “failing” in southeast Texas is premature. He urged the commission not to delay any of the key restructuring milestones.

On the other hand, Ratliff said with “virtually no outside interest in serving customer in these areas, I must strongly recommend delaying competition in east Texas.” Local elected officials also argued competition should be delayed because consumers have no choice other than the incumbent utility.

Pilot a “flop”
In a Wednesday letter to the commission, Longview Mayor Earl Roberts said the region served by SWEPCO, a unit of American Electric Power Co. Inc., Columbus, Ohio, is not ready for competition.

“The pilot project in our area was a flop — not a single customer participated — so it should be clear to state officials that now is not the time for full-fledged electric deregulation,” Roberts said.

Roberts said he is particularly concerned his city will be at a competitive disadvantage when competing for new businesses and industries in the general area. Louisiana has not even passed a deregulation law yet, he said..

Likewise, Rep. Tommy Merritt (R-Longview) said now is not the time to move forward with competition in that region and asked the commission for a delay. The sentiment is the same in Texarkana located in the Northeast corner of the state and served by SWEPCO.

“We tried a pilot project in our area as required by the legislature, and it was a failure. No new companies competed against SWEPCO. No customers switched to a new provider,” said Texarkana Mayor James Bramlett.

“The East Texas pilot project proved one thing: East Texas is not ready for electric deregulation,” he said. Bramlett forecast nothing but problems for elected officials and industrial recruiters if deregulation proceeds.

Beaumont, one of the largest cities in east Texas, also argued against allowing Entergy Gulf States, a unit of Entergy Inc., New Orleans, La., to auction 15% of its generating capacity. The city said the utility needs to generating capacity to serve captive customers who have no other choice.

“The lack of alternatives or lack of participation in the pilot indicates that the region is unable to offer fair competition now,” Beaumont said. “In the absence of a competitive market, the capacity auction harms monopoly customers who have paid to construct or acquire the capacity necessary to serve monopoly customers.”

The city said an auction only serves the public interest if there is a competitive market. Rejecting staff recommendations, commissioners ordered today’s auction to go forward as planned by Entergy Gulf States and SWEPCO.

However, the commissioners agreed Wednesday to hold hearings on whether to open the market in those utilities areas on Jan. 1. Schedules are being decided at a prehearing scheduling conference. A spokesman said a decision is expected by the end of October. PUC spokesman Terry Hadley, said the process of implementing competition in east Texas can be stopped, if the commission determines a need to do so.