Current Affair

THE TERMPOWER POLITICSIS about to take on a whole new meaning in Texas. The Public Utility Commission issued a ruling in February that puts the state’s electric industry—now a collection of regulated monopoly companies—on a path toward deregulation and competition. The PUC ordered utility companies to “unbundle” their generating, transmission, and local distribution activities for account-ing purposes by the beginning of March. The idea is that in time each utility behemoth will break up into three distinct companies.

This restructuring will have a major effect on rates, although whether the cost of electricity will go up or down, and for whom, depends upon whom you believe. The pressure for deregulation comes from companies like Houston-based Destec Energy, which wants to generate and sell electricity and use existing transmission lines to get it to customers, and from large users (such as refineries, hospitals, and shopping malls), which think that competition will bring them lower rates. But the biggest utilities, Houston Lighting and Power ( HL&P), Texas Utilities, and Central and South West, are fighting all-out competition. They contend that “customer choice” will only be a boon for “choice customers,” meaning that all the competition will be for big users, so residential customers are at risk to end up with higher rates. Another part of the PUC’s order changes the current practice of allowing each utility to decide

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