The Power of Choice
By Lily Auliff

Starting January 1, 2002, Texans will be able to choose their electricity providers. Some environmentalists see energy deregulation as an opportunity for renewables to reach the market, while others worry that competition will encourage the least expensive methods of power generation – regardless of environmental impact – and stymie conservation efforts.

How it Works
From June 1 to December 31, 2001, 5% of households and businesses will be allowed to choose their electricity provider – the company that generates or purchases their electricity and delivers it to the power grid - through the Texas Electric Choice Pilot Program. Next year, most all will have the power to choose.

Amid all this change some things will remain the same. The same infrastructure – the electricity poles and wires and power grid – will continue to distribute electricity to your home or business. And the state’s Public Utility Commission (PUC) will continue to regulate electricity distribution in the hopes of ensuring safety and reliability.

Currently, there are eight Retail Electric Providers (REPs) from which households can choose, and six for businesses. Most REPs advertise lower rates or better service to bring in customers. One company, Green Mountain Energy, promises “greener” electricity for a slight premium (see Is Green Mountain Energy Really Green?); at least two more clean power companies are expected to be online by 2002.

Environmental Impact
Energy deregulation could boost the use of renewables in several ways. First, the deregulation bill passed by the Texas legislature in 1999, Senate Bill 7, requires retail electric providers to buy an additional combined 2,000 megawatts of Texas renewable electric generation capacity by January 2009. “It’s a very significant amount,” says Mark MacLeod, Director of Special Projects at Environmental Defense’s Texas office. “Texas will end up producing about 10 times as much non-hydro renewable electricity as it does now. And, in the whole United States, there are only about 2,500 megawatts of non-hydro renewable energy being produced. In today’s numbers, Texas would end up producing 40% of the country’s non-hydro renewable energy.”

Deregulation also allows the public to support renewables through their electricity bills. “For the first time, consumers will have an opportunity to choose what kind of power they want to buy,” says Tom Smith of Texas Public Citizen. “Consumers will be able to buy power that is much cleaner than the standard ‘brown’ power that they get from their current power company.”

Each REP must provide their customers with an Electricity Facts Label, which tells exactly how their energy is produced and how much pollution results from that method. “You’ll have a real opportunity to assess the impact of your choices on the quality of the environment,” explains Smith.

Conversely, fierce competition may push providers to seek the cheapest source of electricity available – often the older, high-polluting coal-fired plants. To alleviate some – but not all - of this problem, Senate Bill 7 requires “grandfathered” power plants, those that predate the 1971 Texas Clean Air Act, to reduce nitrogen oxide emissions by 50% and sulfur dioxide emission by 25% before May 1, 2003.

Some are also concerned that deregulation will stand in the way of conservation. “The way that the utility makes money is by selling more power and building more power plants,” explains MacLeod. “One of the challenges we face in this restructured environment is how to come up with ways to increase incentives for and provide energy efficiency programs.”

Senate Bill 7 does consider this issue. “There is a provision in the bill that requires utilities to provide energy efficiency services with the goal of offsetting the increase in electricity consumption by 10% a year,” says MacLeod. “While that is an okay goal, most people view it as a first start. We can really do a lot more.”

“We think, in general, that deregulation is a bad idea. In the end, consumers will pay far more for electricity than they would have under a regulated system, and more pollution may occur,” summarizes Smith. “However, we’ve done it, and it’s our belief that we have done a fairly good job of developing a decent program in Texas.”

For more information on energy deregulation in Texas, visit www.powertochoose.org.