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May 28, 1998     (512) 463-0300

LEGISLATORS DISCUSS COMPETITION IN ELECTRIC UTILITY MARKETS

VICTORIA - The Senate Interim Committee on Electric Utility Restructuring met in Victoria on Thursday, May 28 to discuss the creation of a competitive marketplace for electric utility companies in Texas. The committee is charged with looking into methods of transition to a competitive market that would provide better service and lower costs to the consumer while being fair to the utility companies. The public hearing focused on testimony that showed the benefits as well as problems of bringing electric utility competition to Texas.

The committee is chaired by Senator David Sibley of Waco and members include Senators Jane Nelson of Flower Mound, David Cain of Dallas, Gonzalo Barrientos of Austin, Ken Armbrister of Victoria, Teel Bivins of Amarillo, Troy Fraser of Horsehoe Bay, and Steve Ogden of Bryan. Sitting in on the hearing was Senator Jerry Patterson of Pasadena.

The public hearing began with testimony from Dr. Eric Hirst representing Oak Ridge National Laboratory which works closely with the United States Department of Energy. Doctor Hirst discussed the steps the legislature would need to take in order to create competition in the electric utility industry. He provided case study comparisons of what other states have experienced in the transition, what costs were incurred, and what problems emerged as a result. Hirst explained that in a fully competitive market, certain utility investments could be lost or become uneconomic for the industry. These "stranded costs" could fall on the consumer in an effort to be recovered. Hirst also provided the senators with suggestions on how to estimate transition costs which would depend on factors such as any regulations in place, the condition of the wholesale market, and any fixed costs or regulatory assets in place.

Invited testimony came from representatives of the Texas Public Utility Commission, the Association of Electric Companies in Texas, the Texas Public Power Association, Texas Electric Cooperatives, the Enron Cooperation, and Consumers Union. Others testifying represented the Texas Retailers Association, the PG&E Corporation, and the Texas Public Citizen's Office.

Testimony highlights included suggestions of how to lower marketplace projections by looking at fuel costs, start-up costs, and heat rates. The members were also shown ways to cut costs through market actions, depreciations, and rate actions. Witnesses reviewed equity, economic efficiency, and legal issues that would determine who would pay for these transitions costs.

As the state approached a competitive market in the electric utility industry, legislators must keep several goals in perspective. The utility company should be able to benefit from the competition and face the same situation as competitive generators. As deregulatory and pro-competitive marketplaces are better for consumers, retail customers should also benefit from the competition. However, a guaranteed lower rate is difficult to provide due to ever-changing marketplaces. Any legislation must remain flexible in order to adapt to change over time.

The committee's next hearing will be held in Austin in June. The committee will then gather its findings and make recommendations to the 76th Legislature which convenes in January of next year.

SENATORS HOLD WORK SESSION IN DALLAS

The Senate Interim Committee on Gangs and Juvenile Justice met for a working session on Thursday, May 28, 1998 in Dallas. The committee is investigating methods of gang prevention and intervention efforts and collaboration among law enforcement agencies, education, state and local juvenile justice officials.

Members of the committee include Senator West (chair) of Dallas, Robert Duncan of Lubbock, Chris Harris of Arlington, Jon Lindsay of Houston, and Mike Moncrief of Fort Worth. Topics for discussion dealt with criminal information systems and the compilation of a statewide gang database. Accordingly, the members discussed criteria for the collection, retention and confidentiality of gang intelligence information as well as enhanced training for law enforcement officials regarding the collection and maintenance of this information.

The committee will present a final report to the 76th Legislature which convenes in January of next year.

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