Texas Deregulation A Success Story

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Texas Deregulation A Success Story
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Texas Deregulation A Success Story
With Customer Switching In Line With Other
Successful Deregulated Markets
Incumbent market share1 Years since deregulation
Percent
Wireline
North Texas residential
South Texas residential
UK residential2
1 Market share estimates based on customer
count 2 Estimates for 2003 and 2004 Source PUC
OFGEM
There Is Still Room For Improvement In ERCOT
As Key Milestones Approach

• Sunset Review1
• The Sunset Advisory Commission reviews
  performance of The Public Utility Commission of
  Texas (PUC) and the Office of Public Utility
  Counsel (OPUC) every 12 years
• The next review should be completed during the
  2005 session
• Key recommendations of the Sunset Advisory
  Commission include
• Changes to ERCOT/PUC governance structure
• Extension of the PUC for 6 years

Market inefficiencies drive significant costs to
market participantsacross the ERCOT system
The competitive market in Texas is functioning
well andTXU does not anticipate any major
structural changes in the marketplace
1 Estimated cost of bad debt for key ERCOT
retailers in 2003 TXU retail bad debt in 2003
was 120 MM 2 OOME down cost to the system 3
Reduction of ask price to energy retailers of
0.2 cents / KWh on 300 TWh 4 Unaccounted for
energy costs at 1 of load at 40 / MWh on 300
TWh (Line loss can represent an additional 5 of
load cost) 5 Based on 6 month RMR costs for
delay at La Palma of 15 million and 12 month RMR
costs on delay at Davis of 30 MM 6 ERCOT
requires approximately 2 GW of new capacity per
year better siting reduces transmission cost by
10,000 per MW
1 The Sunset process is guided by a 12-member
body of legislators and public members appointed
by the Lieutenant Governor and the Speaker of
the House of Representatives.