Would we want to invite Wood to participate?


Wednesday 08/23/2000


     Texas lawmakers heard reassuring words from the top state regulator
yesterday
that Texas will not experience a generation shortfall in coming years or the
wholesale market price spikes similar to those in California this summer.
     Public Utility Commission of Texas Chairman Pat Wood pointed to 
sufficient
generation already online to cover 2000 peak summer demand an additional 9,655
MW
slated to hit the grid by 2002 that will amply meet current load growth
projections.
     The subject of energy prices is of particular interest as Texas launches 
a
statewide pilot program in eight months, a precursor to full-blown competition
starting Jan. 1, 2002. Texas regulators said candidly they hope to profit from
mistakes identified in California's move to a retail electric market. While
California has quickly retired much of the debt associated with stranded 
costs,
restructuring has been fraught with problems.
     Three problems mentioned concerning the California plan include
insufficient
generation being until two years ago, insufficient participation by 
non-utility
players and, most recently, naturally short utilities having to pay daily
clearing
prices at the California Power Exchange that might have been gamed by other
utilities. Under questioning by eight lawmakers, Wood deflected each question
with
answers designed to calm consumer and industry fears that a repeat of
California is
possible in Texas.
     Wood said without hesitation that Texas is benefiting from other states'
forays
into a competitive marketplace. Texas will not experience California's
difficulties
because its rules have been written slower and with participation from all
industry
participants -- consumer groups, investor owned utilities, public power
entities,
independent power producers and environmental concerns, he said.
     Wood described an East Texas utility without generation as being in a
similar
situation as beleaguered San Diego Gas & Electric. The key distinction is that
the
utility has entered into long-term contracts to cover its obligations and
forecast
needs removing it from being susceptible to price swings during periods of 
high
price volatility. The utility, Wood said, has even experienced a per kilowatt
decrease over the last three years from near 8 cents/kWh to near 4.5 cents.
     Texas ratepayers can rest easier than Californians because Texas moved
aggressively to adopt a "pro-generation atmosphere," Wood said.
     Texas and the nation's growing dependence on natural gas to fuel most of
the
large generation projects currently permitted or under construction caused at
least
some concern to one lawmaker. "I'm a little concerned about all our eggs being
put
in the natural gas basket," state Sen. David Sibley, one of the leaders of the
restructuring effort in Texas, said. Wood responded that coal may again come
into
favor if gas prices stay high. "There will be a market response at every level
of
natural gas," Wood said.
     Wood concluded his by describing microturbines and distributed generation
as
vital in helping Texas avoid generation shortfalls and price explosions. "This
is
our future," Wood said, pointing to distributed generation as being able to
circumvent existing transmission constraints. "That's why I call it the silver
bullet," he ended.
     Wood testified before the Electric Restructuring Legislative Oversight
Committee in a road show put on by the Texas Legislature in Houston, one of
several
cities to host the hearings.      RC