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Professor: Deregulation can work in Texas

Jan. 26, 2001

California problems shine light on nation

By BJ GOERGEN

Staff writer

California ended a power auction Wednesday in a drastic effort to buy more electricity for the state's residents, who have been experiencing rolling blackouts during the past month.

The power crisis in California is largely blamed upon the state's deregulation law passed in 1996, according to an article by The Associated Press. The law, which ordered utility companies to sell a portion of their power plants and buy wholesale power, also capped the rates that companies could charge customers.

Texas has been watching the situation in California closely because the Texas Senate passed a bill in 1999 that will bring deregulation to Texas starting Jan. 1, 2002.

'Introducing competition to the electricity industry is one of the most complicated issues facing our state and nation today,' a spokeswoman for the Texas Coalition for Affordable Power said.

California Gov. Gray Davis said he thinks deregulation supporters in 1996 made a huge miscalculation by underestimating the increased needs of the technology companies in Silicon Valley, and there was no effort to build new plants to meet the increased demand.

'The energy shortages in California are a combination of many things,' Dr. Dudley Burton, an environmental studies professor, said. California took the lead in deregulation and Texas has learned from its experiences, Burton said.

'Deregulation in Texas is completely different than deregulation in California,' a spokeswoman for the Texas Coalition for Affordable Power said. 'There is plenty of energy generated here to support our growth.'

Supporters of deregulation are quick to mention that Texas has relatively large supplies of natural gas and oil. Pilot projects across Texas began in the fall of 1999 and only investor-owned utilities, which are located mostly in rural areas, were affected.

'Deregulation can work in Texas and it can work in California,' Burton said. 'We have to let the market work.'

While supporters of deregulation claim that it ultimately reduces the cost of electricity for consumers, some environmental activists support deregulation for other reasons.

'Deregulation opens up the supply mix of energy sources,' Burton said. Companies would have incentives to build more efficient power plants after deregulation, he said.

Renewable energy resources burn cleaner than fossil fuels and they never run out, according to the Public Utility Commission of Texas. The more renewable energy resources, such as fuel cells, wind energy and biomass are used, the more affordable their technology becomes, said the commission.

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