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February 5, 2001     (512) 463-0300

Joint Committee Examines
Electric Restructuring Issues

AUSTIN - The Senate Business and Commerce Committee and the House State Affairs Committee held a joint hearing on Monday, February 5, to examine electric utility restructuring issues.

The chair of the Business and Commerce Committee, Waco Sen. David Sibley, opened the hearing by addressing the highly publicized power shortage California has experienced since deregulation.

"The restructuring of the electric utility industry has been given a bad name by the troubles in California," Sibley said.

Sibley is the author of Senate Bill (SB) 7, legislation passed by the Texas Legislature in 1999 that began the state's electric industry restructuring process. He said SB 7 will ensure that Texas will not experience the same difficulties as California.

The California Legislature capped electricity prices at 1997 levels, Sibley said, leaving utilities with no way to pass on rising wholesale power costs. Aggravating the situation, no new major generating plants were built in California in the 1990s and utilities were prohibited from buying wholesale power in advance, forcing them to buy expensive power on short notice and sell it at a loss because of the price caps.

"The Golden State designed a system that is neither fish nor fowl," Sibley said. "It is half free market and half regulated."

Dallas Rep. Steve Wolens, who chairs the House State Affairs Committee that studied SB 7 before passing it out to the full House, also said Texas is taking a different path to electric deregulation than California did.

"There is nothing that they did that we copied," Wolens said. "If they did it one way, we did the opposite."

But Wolens also said the situation in California bears watching and that the committees would continue to meet and keep an eye on California.

Other Senate committees meeting on Monday included Finance, which heard budget testimony on higher education, and Jurisprudence, which is considering SB 3, dealing with the preservation of DNA evidence and the provision of post-conviction DNA testing.

The Senate is adjourned until 11 a.m. Tuesday, February 6, 2001.

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