Thought, Legislative and Regulatory Certainty
Pat Wood is Former FERC and Texas PUC Chair. Kenny Mercado is SVP, CenterPoint. Jim Steffes is EVP, Direct Energy. Ken Medlock is Senior Director, Center for Energy Studies, Rice University.
PUF’s Steve Mitnick: How well are the Texas wholesale and retail markets operating now?
Pat Wood, former Chairman of the Texas PUC and FERC: Let’s look at it from a producer side and from a customer side. As a reminder, legislation was passed in 1995 to start a Texas wholesale market, ERCOT, and in 1999 to open the retail market.
Chairman Donna Nelson of the Texas PUC put forth an exhibit last year that was widely circulated. It showed that since the retail market opening in 2002, rates had gone down in real dollars by half. Gas today is actually a little higher than it was in 2002, and as it spiked up in 2005 and again in 2008, wholesale rates ran up as well. And today wholesale rates are at all-time lows.
By and large, competition has worked as we who set it up hoped it would work in both the wholesale market and the retail market. There have been enough players in both markets to make it work. The large companies here did all the right things that we wanted them to do to enable the market. Barriers to entry were knocked down. Lot of transparency.