Yet Texas has moved to the forefront of electric deregulation, and has done so without any of the negative publicity associated with California and now the northeast. How has Texas done it?
“We have a couple of advantages,” says Jess Totten, director of the electric program at the Texas Public Utilities Commission (PUC). “One is that we are physically isolated from both the East and the West, so if problems start in those areas, they won’t propagate into Texas.” Another, Totten says, is that the state has invested heavily in transmission facilities. “We have spent $1.3 billion on transmission over the past five years, and we made sure we made it easier for new generators to get onto the transmission system.”
Texas has also been aggressive at promoting and building new generation within its borders, thus shortening the distances power must travel to reach customers. “Every morning California wakes up they have to import 30 to 40 percent of their power,” says Heather Tindle, communications director for the Texas PUC. “We don’t have to do that. “There is tons of generation in Texas. We have reserve margins in the 30 percent range.”
Mike Greene, president of Oncor Electric Delivery and chairman of ERCOT, says another key lesson is that successful deregulation takes both careful planning and time.
“In 1997 or 1998 we created a transmission adequacy task force,” Greene says. “We made sure we had the infrastructure to make a move to competition a reality.”
Greene says Texas also has the advantage of having an active and single regulatory body – the Texas PUC – that encourages transmission and sets rules that let investors recover transmission investment costs. “We don’t end up with long, drawn-out rate cases,” he says. “Our rules are straightforward and allow for a decent return on investment.”
Texas regulators and executives, though are not resting on their laurels or claiming the Lone Star State has solved all its electric generation and transmission issues.
“We are not invulnerable to bad things happening,” Tindle says, noting that local outages struck Dallas this past spring after a lightning strike and College Station, Texas, when relays failed at a substation. “We are not out thumping our chests saying this cannot happen here,” she says.
“You are going to have problems in any system, but we have been able to recover from them,” adds Totten. “This blackout on the East Coast is going to focus public attention on reliability. I don’t see anything specific we are going to have to change as a result of it, but we will be watching closely to see what they come up with.”
“You never know what can happen tomorrow,” Greene concludes. “But so far we’ve done a good job, we started early, we took it slow and we seem to have got it right.”
