Texas Gov. George Bush's (R) unexpected electric restructuring legislation that would have opened markets to competition in the state on Sept. 1, 2001 has died. The proposal would have slashed residential rates by 10 percent in the next three years, frozen industrial rates until 2001, and cut small-business rates by 4 percent.
The Bush plan, released on May 5, would have guaranteed that utilities would recover all stranded investment in generation plants at market rates of return. Utilities would have been allowed to securitize some stranded investment up front, and securitize the portion of stranded costs remaining unmitigated at the close of the freeze period.
The issue that sounded the death knell for this bill was stranded cost recovery. The state's rural cooperatives withdrew their support for the bill in a disagreement over securitization, resulting in a lack of support for the bill by legislators from areas where cooperatives do business. No time remained in the session to work out a compromise.
The next session of the Legislature does not meet until 1999, when electric restructuring is expected to be a major topic.