NEWS 
Technical woes to stall power swap 
R.A. Dyer 
Star-Telegram Austin Bureau 

Jun. 1, 2001 
Fort Worth Star-Telegram (Texas) 
FINAL 
Page 1 
(Copyright 2001) 

AUSTIN - Electric deregulation comes to Texas today, but Texans who signed up 
to switch to a new power company face at least a month's delay because of 
technical problems, government and utility officials said Thursday. 

Computers at an organization overseeing the state's electric grid still 
cannot process the tens of thousands of requests to transfer service from one 
electric company to another, officials said. Such service transfers are the 
backbone of the deregulation program, under which electric companies compete 
for customers. 

The state begins phasing in deregulation today with a pilot project allowing 
customers to pick their provider. Full deregulation is scheduled to begin in 
January. Deregulation has been branded a disaster in California, but Texas 
officials say they are being careful not to make the same mistakes.

Regulators are calling for "virtual" switching that would allow billing from 
new providers to start in July - about a month late - even if the new 
computers still cannot handle the load, officials said. Both utility groups 
and consumer advocates are critical of virtual switching.

Carol Biedrzycki, a consumer advocate who helps oversee the deregulation test 
project, said: "I'd say we have serious problems. I didn't think there would 
be as many technical problems as we're having. ... I'm not saying they're 
doing a bad job - but it's just much more complicated than anybody thought it 
would be."

The state's deregulation law opens Texas to full retail competition among 
electric utilities next year. But a less ambitious test project kicks off 
today in which companies can compete for up to 5 percent of the market, and 
the grid operator can test its new computer systems.

As part of that kickoff today, the grid operator will christen its 
45,000-square-foot, $12 million control center in Austin. It also plans to 
open an 85,000-square-foot, $33 million facility next year.

Tom Noel, executive director of the Electric Reliability Council of Texas, or 
Ercot, which operates the grid, expressed optimism Thursday and played down 
any reported delays in the pilot project. He said the council can now manage 
about 100 switches a day but should be able to process about 20,000 each day 
next month.

"But there are aspects [ of the pilot] that will occur later than we 
thought," said Noel.

"We have gone through various mock market drills and in my opinion, [the 
system] does not work well enough yet to proceed. We're going through it in a 
very deliberate way," he said.

The challenge of managing so many switches - over 57,000 residential 
customers have requested a change under the pilot - has also earned Texas a 
spot on a "monitoring list" for summertime electric problems.

According to a report last month by the North American Electric Reliability 
Council, an industry organization of power grid operators, the reliability 
council's conversion could lead to operational difficulties this summer.

But Noel played down the potential for difficulties and said the system 
should be fully operational in time for full competition in January. "We 
realize that we need to go through this at a walking pace," he said. "We'll 
do a small number of switches, for each of the competitive retailers, just to 
be sure that our system is working as it should."

The Electric Reliability Council of Texas, utilities and the state Public 
Utility Commission have also begun discussing the implementation of the 
so-called virtual switch process, which would bypass the fully automated 
system now being used, say utility and regulatory officials.

The proposal has drawn criticism from both utility groups and consumer 
advocates, who say it does nothing to prepare Texas for deregulation because 
it does not test the system that would operate when the market fully opens 
next year. But business groups and regulators - at the PUC's request - 
continue discussing how to implement the virtual switch-over.

TXU spokesman Christopher K. Schein characterized the proposal as a sort of 
"trophy switch" that allows officials to boast that they have been able to 
switch customers from one company to another - even though the underlying 
computer systems remain untested. "It's a system that's difficult to manage 
and you're focusing companies to detour resources to create a short-term 
fix," he said.

Janee Briesemeister, a senior policy analyst at Consumers Union, said 
regulators would create "a pretend market" through virtual switching. "And 
that's just adding additional costs onto an already very, very expensive 
operating system," she said. "The pilot is called a pilot for a reason, and 
that's because the purpose is to test the systems necessary to support the 
new market structure."

Although electric competitors can serve up to 5 percent of the market under 
the pilot project beginning today, far fewer customers have expressed 
interest in changing service.

In the TXU service area, 19,533 residential customers have signed up for a 
competitor's service. That represents about 22 percent of the customers 
eligible for service under the pilot, and about 1 percent of all residential 
customers in the TXU service area.