Texas to Avoid California Electricity

AUSTIN - July 10, 2001 - The Public Utility Commission of Texas (PUC) and Texas Electric Choice announced today the availability of an educational brochure that explains why Texas will not experience California-style blackouts and electricity price spikes. Titled "Texas is Different from California," the brochure informs electric customers that the lights will stay on in Texas because we have plenty of power reserves, diverse sources of power and a strong infrastructure to support competition.

"Texas is implementing competition before deregulation to ensure that we get it right," said PUC Commissioner Brett Perlman. "In other parts of the country, there are legitimate causes for concern about the energy infrastructure. But Texas has a strong infrastructure to meet our needs for electricity, even during a hot Texas summer."

Many areas of the United States have experienced strong economic growth in recent years. Questions are being raised about the supply of electricity primarily because new infrastructure to produce and deliver electricity has not kept pace with the new homes and businesses that use electricity in our growing economy. In Texas, new power plants have been built to supply electricity for our growing economy. Texas has also structured the competitive market to encourage competition among Retail Electric Providers (REP) and given them the tools to offer stable prices to customers.

The brochure explains that Texas has plenty of power to keep up with the rising demand for electricity. More than 50 new power plants have been built or are currently under construction in Texas since 1995 and 31 more are in the planning stages. California, on the other hand, has built only two power plants since 1995. Texas gets its power from diverse sources, whereas California relies on hydroelectric power for 25 percent of its electricity needs. Therefore, during dry conditions, California is susceptible to electricity shortages.

In 1999, the Texas Legislature passed a law that introduces retail competition in electricity beginning in January 2002. This law gives Texans the power to choose a Retail Electric Provider (REP) - the company that provides their electricity. Customers of Texas' investor-owned utilities will be able to shop for a REP - giving Texans more control over their electricity buying decision. The PUC will continue to enforce customer protections and regulate the delivery of electric service to ensure safety and reliability.

To obtain a copy of the "Texas is Different than California" brochure, or for additional information about Texas Electric Choice, customers may contact the Texas Electric Choice answer center toll free at 1-866-PWR-4-TEX (1-866-797-4839). Customers may also download a copy of the brochure from the www.powertochoose.org web site.

	Texas	California
1	+ More than 27 new power plants have been built in Texas since 1995, with another 27 under construction and 31 more in the planning stage.	- Only two new power plants have been built in California since 1995.
2	+ It takes approximately two years to build a new power plant in Texas.	- California has a long and difficult licensing process, where power plants take six to seven years to complete.
3	+ Most areas of Texas have little ability to export or import electricity to and to and from other states. The electricity from most of the new power plants in Texas will be consumed in Texas.	- California historically imports 25 percent of its electricity from other states.
4	+ Texas produces electricity, utilizing a diversity of fuel sources, including natural gas, coal, nuclear energy, wind and others.	- California is dependent upon hydropower for 25 percent of its power needs. California's power supply is vulnerable to dry conditions.
5	+ The Texas market allows REPs to enter long-term contracts for power, to help shield customers from price increases.	- California did not allow long-term contracts. This forced electric providers there to buy power in a daily market, where they often had to pay high prices when demand was high.
6	+ Texas is aggressively building transmission lines to interconnect new power plants, maintain reliability and give REPs many choices in where they buy power.	- California has significant transmission constraints that limit the ability to move power between the northern and southern regions of the state.
7	+ In advance of retail competition, Texas has adopted rules encouraging generation of power on customers' premises to give customers more control over the reliability and price of electricity.	- California began addressing rules for on-site generation after retail competition began.
8	+ The Texas rules encourage new companies to compete at a retail level.	- California's rules, particularly the regulations on retail rates, discouraged competition at the retail level.
9	+ Texas has learned from California and other states experiences what not to do and what to do.	- California was one of the first states to deregulate its electric industry.
10	+ Texas has a strong restructuring plan in place.	- California's restructuring plan has contributed to power shortages, high prices in the wholesale market and financial problems for the state's utilities.