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Enron Mail |
Would we want to invite Wood to participate?
Wednesday 08/23/2000 Texas lawmakers heard reassuring words from the top state regulator yesterday that Texas will not experience a generation shortfall in coming years or the wholesale market price spikes similar to those in California this summer. Public Utility Commission of Texas Chairman Pat Wood pointed to sufficient generation already online to cover 2000 peak summer demand an additional 9,655 MW slated to hit the grid by 2002 that will amply meet current load growth projections. The subject of energy prices is of particular interest as Texas launches a statewide pilot program in eight months, a precursor to full-blown competition starting Jan. 1, 2002. Texas regulators said candidly they hope to profit from mistakes identified in California's move to a retail electric market. While California has quickly retired much of the debt associated with stranded costs, restructuring has been fraught with problems. Three problems mentioned concerning the California plan include insufficient generation being until two years ago, insufficient participation by non-utility players and, most recently, naturally short utilities having to pay daily clearing prices at the California Power Exchange that might have been gamed by other utilities. Under questioning by eight lawmakers, Wood deflected each question with answers designed to calm consumer and industry fears that a repeat of California is possible in Texas. Wood said without hesitation that Texas is benefiting from other states' forays into a competitive marketplace. Texas will not experience California's difficulties because its rules have been written slower and with participation from all industry participants -- consumer groups, investor owned utilities, public power entities, independent power producers and environmental concerns, he said. Wood described an East Texas utility without generation as being in a similar situation as beleaguered San Diego Gas & Electric. The key distinction is that the utility has entered into long-term contracts to cover its obligations and forecast needs removing it from being susceptible to price swings during periods of high price volatility. The utility, Wood said, has even experienced a per kilowatt decrease over the last three years from near 8 cents/kWh to near 4.5 cents. Texas ratepayers can rest easier than Californians because Texas moved aggressively to adopt a "pro-generation atmosphere," Wood said. Texas and the nation's growing dependence on natural gas to fuel most of the large generation projects currently permitted or under construction caused at least some concern to one lawmaker. "I'm a little concerned about all our eggs being put in the natural gas basket," state Sen. David Sibley, one of the leaders of the restructuring effort in Texas, said. Wood responded that coal may again come into favor if gas prices stay high. "There will be a market response at every level of natural gas," Wood said. Wood concluded his by describing microturbines and distributed generation as vital in helping Texas avoid generation shortfalls and price explosions. "This is our future," Wood said, pointing to distributed generation as being able to circumvent existing transmission constraints. "That's why I call it the silver bullet," he ended. Wood testified before the Electric Restructuring Legislative Oversight Committee in a road show put on by the Texas Legislature in Houston, one of several cities to host the hearings. RC
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