Time to open retail power markets in the other Texas?

Competition may be thriving in ERCOT with its 85% of the state's load but that still leaves a lot of customers and 25% of the land area without benefits of the discipline of a marketplace.
     The PUC has launched hearings (Project 28971) to learn whether the time is right for the Texas portion of El Paso Electric's (EPE) service territory when EPE's rate freeze expires in September of next year.
     The PUC can extend the rate cap if it finds EPE isn't ready.
     The first hearing was March 4 in El Paso and the next is to be April 2 in Austin.
     Retail competition has been suspended until at least January 2007 in Southwestern Public Service (Xcel Energy) territory in the panhandle.
     AEP-Southwestern Electric Power's footprint is spared the vagaries of competition in northeast Texas as is Entergy in southeast Texas.
     The Entergy delay until December this year is to be addressed in June hearings.
     The commission will determine for EPE whether it should adopt more specific standards to assess the area's readiness.
     The lack of progress there in developing an RTO may play a key role.
     The staff hopes to get proposals ready by year's end.
     EPE won exemption from open markets under SB 7 in 1999 until January 2002.
     It serves about 320,000 customers in and around El Paso and in southern New Mexico and is part of WECC, the NERC-related, 14-state reliability council.
     WECC won't take a stand on opening up EPE's market nor will it become an RTO claiming its land area is too big, covering an area equal to over half of the US.
     Meanwhile EPE has helped fund WestConnectRTO, but FERC is nowhere near approving WestConnectRTO or any other RTO for the area.
     EPE's bankruptcy settlement isn't helping as well.
     SB 7 outlaws retail competition where a utility had a rate freeze when the law was passed. EPE came out of bankruptcy with frozen retail prices in 1996 so that creditors would be paid.
     New Mexico opted last year to repeal its competition law.
     EPE hasn't taken an official stand on its readiness or lifting the rate freeze and it's delayed plans to separate generation and distribution because of the unclear outlook in both states.
     EPE has 1,500 mw of generating capacity with about half from the Palo Verde nuclear plant.
     It buys power from utilities and marketers and it sells wholesale power in Texas and New Mexico and old Mexico.
     The utility's plan for the 17+% of its power bought from outside sources is to buy power when needed rather than building capacity.
     It's looking now at RFP responses for 2005-2006. 

(Story originally published in Restructuring Today 3/8/04)