Process Designed to Ensure Seamless Transition

Texas electric customers enrolled in the upcoming pilot project will be switched to new retail electric providers (REPs) gradually this summer. This approach will help ensure the optimal operation of all necessary systems.

This process does not affect the continuous reliability management of the system grid by the Electric Reliability Council of Texas, Inc. (ERCOT). It will also assure systems reliability during the pilot.

The Texas electric restructuring law of 1999 requires investor-owned utilities to offer customer choice for up to five percent of their electrical load beginning June 1, 2001. The law establishes the pilot program to evaluate the ability of investor-owned utilities and power regions to provide customer choice. The full rollout of retail competition begins Jan. 1, 2002.

In preparation for the pilot, several new REPs have been marketing electricity at discounted prices to both residential and commercial customers for service beginning June 2001. So far nearly 50,000 Texas households are signed up for the pilot project. At the same time, the Public Utility Commission (PUC) and ERCOT have been working with utilities to ensure a seamless transition as customers change from their existing utility to a new REP.

"The pilot program was designed to give everyone - customers, retailers, utilities, generators and ERCOT - time to test our retail systems to make sure everything works well," said PUC Chairman Pat Wood, III. "When a switch is made, the only thing we want customers to notice is the new provider and the new bill level."

ERCOT manages the delivery of electricity for most of Texas and will control the process of switching. It will oversee the merger of ten operational "control areas" into the single control area needed for an efficient retail market. ERCOT has been testing new computer systems and how they communicate with REPs and utilities. Early results show more fine-tuning is needed before customers can be switched. As a result, customers won't be switched to new REPs until July.

"We're making progress every day," said Tom Noel, Chief Executive Officer of ERCOT. "We want to be fast, but we insist on getting it right. These are complex computer and communications systems, and we need to take some time to test and debug them."

"Customers as well as providers need complete confidence in the system," said PUC Commissioner Brett Perlman. "The pilot program will earn that confidence without compromising Texas' electric system adequacy and reliability."

ERCOT will use the following timetable to phase-in customer switching process:

• Beginning June 1, ERCOT will accept a limited number of requests from each REP to switch customers. ERCOT will manually monitor the computer system processes during this phase. By July 6, the system is expected to handle approximately 21,000 switches a day.
• A switch request takes approximately two weeks to process, including the customer notification mandated by PUC customer protection rules to prevent unauthorized switching, or slamming.
• Beginning mid-July, customers who enrolled in the pilot program (and whose REP requested they be switched during June) will be switched at their next meter reading.
• The new REP will bill customers after the next meter reading.

For some pilot customers, service from their new REP along with its new rates may not go into effect until late July or August. Most pilot customers will receive a June and July bill from their current utility and will receive a bill from the new REP in August or September.

Websites: www.puc.state.tx.us and www.ercot.com