Priority is Smooth, Reliable Operation

Texas electric customers enrolled in the state's pilot program will be switched to new retail electric providers (REPs) at a more gradual pace than previously anticipated. This allows the Electric Reliability Council of Texas, Inc. (ERCOT) to continue testing its new systems and market processes to ensure a smooth transition to full retail competition on Jan. 1, 2002.

ERCOT's systems are designed to transform wholesale electricity operations from the existing ten utility control areas to a single regional control area. The single control area will allow competitors to move electricity across the state to serve their customers. ERCOT has been testing its operating systems for weeks, but it has decided that additional interactive testing with the utilities and new market competitors is needed before it begins operating as a single control area, now scheduled for July 20. As a result, customers will not be switched to new providers until after this date.

"This additional time will assure us that our systems are operating reliably and provide all market participants more opportunities to verify that their own systems are ready to mesh with those of ERCOT," said Tom Noel, CEO of ERCOT. "Given the size and complexity of the new control systems and market processes, together with the shift to a competitive retail market for electricity in Texas, it is prudent to go the extra mile to ensure that all systems are ready before taking this next step."

The Texas electric restructuring law establishes a pilot program that allows up to five percent of customers to switch providers. The pilot program provides an opportunity to test and fine-tune systems necessary for retail choice before the full opening of the retail market on Jan. 1, 2002.

ERCOT is developing systems to allow new REPs to switch retail customers from their existing utility to the new provider. ERCOT systems are designed to handle approximately 21,000 switch requests a day, but ERCOT will accelerate the number of switches when the systems are operating smoothly.

For most pilot customers, service from their new REP at new rates should go into effect later this summer. Customers would then get a bill from their new REP about a month after service is switched.

"We are working closely with ERCOT to ensure that all systems are ready to go before full launch of retail competition next year," said Public Utility Commission (PUC) Chairman Max Yzaguirre. "This helps to ensure system reliability as we move to an open market with a more favorable rate structure."

"We will not compromise the reliability of the Texas electric system," said PUC Commissioner Brett Perlman. "The additional testing will give us needed safeguards for a successful pilot program."

In preparation for the pilot, new REPs have been marketing electricity at reduced prices to both residential and commercial customers. So far, more than 80,000 Texas households are signed up for the pilot project. At the same time, the PUC and ERCOT have been working with utilities to ensure a seamless transition as customers change from their existing utility to a new REP.

"It is imperative that any bugs in the system be removed," said PUC Commissioner Rebecca Klein. "We will not sacrifice the long-term benefits of a competitive market by looking for a quick fix for the pilot."