Why the Texas Restructuring Model is Different
- Although Texas and California have similarly
sized electric grids and similar growth in power demand, Texas has put more
than eight times the capacity on line between 1996 and 1999 than California
- Texas has lead-time of two - three years to
construct new power plants, while California's lead time is approximately
seven years. Since 1995, 47 new power plants have been built or are being
built in Texas, representing one-fourth of all power plants being built in
the nation. California has built only two power plants since 1995.
- New plant construction will allow power
generators to easily meet the needs of residential and non-residential power
users in out state.
- Texas imports less than one percent of its
power during peak power demand, compared to California, which imports at
least 25 percent of its load during peak demand.
- Long-term wholesale market contracts in Texas
shield customers from price volatility. In Texas, power generators and
Retail Electric Providers (REPs) will be able to negotiate wholesale power
purchases for the lowest price, which will benefit customers.
- In California, spot purchases have left
utilities and customers vulnerable to price spikes. California rules
regarding bulk power purchases mean that utilities, and therefore customers,
will often pay an unnaturally high price. The California power system also
encouraged price spikes during peak demand periods.
- Texas enacted strong measures to protect
customers during the transition to a fully competitive retail electric
market. These measures will keep a lid on electric rates so Texas electric
customers won't see their electric bill double or triple, as happened last
summer in the San Diego area.