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Deregulation

In 1999, the Texas Legislature passed Senate Bill 7 which introduced competition to the retail electric market in Texas. Beginning January 1, 2002, electric customers of Texas investor owned utilities (IOU’s) had a choice of their retail electric provider (REP). Electric cooperatives and municipal electric systems, as well as those customers of IOU’s in non-Electric Reliability Council of Texas (ERCOT) regions were exempted from participating in deregulation. Instead, electric cooperatives and municipal electric systems were given the choice to opt into electric competition.

The state’s electric grid is comprised of four regions, the Texas Regional Entity (TRE); i.e., ERCOT, the Southeastern Electric Reliability Council (SERC), the Western Electricity Coordinating Council (WECC), and the Southwest Power Pool (SPP). The Texas Public Utility Commission (PUC) delayed implementation of retail access in the SERC in southeast Texas, WECC in western Texas and areas covered by the SPP in the Texas Panhandle and North and East Texas regions. The PUC cited a lack of a regional transmission organization (RTO) in the SERC region and the absence of marketing by retail electric service providers as the primary reasons for the decision. Reasons cited for the delay in the SPP included: the lack of an RTO in that region, no retail electric suppliers, and wholesale electricity markets in the area were not yet competitive.

The complexities of establishing a competitive marketplace and the Texas Legislature’s action delaying competition in non-ERCOT regions of Texas directly affects TVEC’s potential ability to implement retail access. Approximately half of TVEC’s service territory is located in the SPP while the remainder is located within the ERCOT. If TVEC chose to enter the deregulated market today, members residing in the SPP portion of TVEC’s service territory would be unable to participate in customer choice.

Currently only one of Texas’ 67 electric cooperatives – and none of the city-owned utilities – has opted into retail competition.

The factors affecting the ability to offer customer choice are very complex, potentially very costly to TVEC and its members, and the decision is irrevocable.