States Scramble to Make Deregulation Work

State regulators are in for plenty of action these days. Just look at Texas, a hotbed of both the natural gas industry and of electric-power mergers.

The Public Utility Commission of Texas (PUCT) in Austin could be in for a long battle as independent power producers (power firms that aren't regulated monopolies) push for retail "wheeling" of power in January, when the Texas Legislature reconvenes. These firms include Enron Corp. and Destec Energy.

If legislators decide to allow consumers to choose their power supplier in the same way they choose their long-distance telephone company, some observers predict a years-long regulatory battle like the one that will soon lead to wholesale wheeling here. (Wholesale transactions allow electric companies to buy and sell power to each other.) It may be several more months before final rules and pricing rules are in place. In other states, wholesale pricing is set by the Federal Energy Regulatory Commission.

But all 50 states face tough regulatory issues. A 1992 federal law deregulated the industry but left details to states.

Some federal lawmakers, including Rep. Dan Schaefer (R) of Colorado, want legislation to change to a federal deregulation system. That would allow consumers nationwide to have their choice of electricity suppliers.

Jim Marston, director of the Texas office of the Environmental Defense Fund, says that even if legislators pass a retail wheeling bill early next year, consumers won't be plugging into independently produced until "1999 or even later."

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