May 24, 2007 8:31 am US/Central
Texas Lawmakers Reach Deregulation Bill Compromise
AUSTIN (AP) ―
State regulators would have more power to police electric market abuses and would have the authority to review future sales of regulated transmission companies under an agreement reached by House and Senate lawmakers on Wednesday.
Disappointed by the results of the state efforts at deregulation started in 1999, state lawmakers considered making sweeping changes to try to force utilities to drop their prices.
Lawmakers also considered whether to force state oversight of the proposed $32 billion sale of TXU Corp. to private equity companies Kohlberg, Kravis Roberts & Co. and Texas Pacific Group in the largest private buyout ever.
The deal struck Wednesday won't do that, but gives the Public Utility Commission oversight of any future sale of regulated utility transmissions.
Expected to be given final approval by House and Senate lawmakers as early as Friday, the bill also seeks to prevent collusion between a companies' wholesale, retail and transmission entities. The bill requires each to operate as seperate companies, but does not force utilities to sell off each entity.
Kohlberg Kravis Roberts & Co. and Texas Pacific Group had warned that splitting the company would trigger an $8 billion tax bill.
Sen. Troy Fraser, R-Horseshoe Bay, said the compromise also allows the PUC to impose hefty fines if regulators determine companies have been manipulating the market.
It also allows the PUC to reduce rates if it found a utility was charging more than 2 cents per kilowatt hour more than the average of other plans in the same region.
"It's still a free marketplace, but we're giving the PUC controls so that if somebody steps out of line, we're giving them a hammer to go after them," Fraser said.
The bill also requires a 10 percent discount to Texans who have never switched to a competitive electric provider, although the state's two largest electric providers have already promised a 10 percent cut.
"We've created one of the toughest code of conducts in the country," to prevent market manipulation, said Lt. Gov. David Dewhurst."
(© 2007 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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