Another Take on Texas and Energy

Regarding “Power Deregulation: A Tale of Two States,” March 17:

You identified a number of fundamental factors that made Texas’ retail electric power experience in 2002-03 markedly different from California’s retail electric experience in 2000-01. What you didn’t make explicit was that the factors that lowered retail prices and assured reliable supplies in Texas were wholly beyond the control of any short-term market conditions or were produced by direct governmental intervention.

In other words, deregulation had virtually no effect on Texas’ positive results.

In simple terms, Texas benefited from the good news that would have been delivered absent the state’s retail electricity deregulation. According to your report, five new power plants were built in Texas from 1994 to 1998. My recollection is that 10 units are coming on stream. They’re looking for customers.

Texas has chosen to be a self-contained, isolated electric power jurisdiction with virtually no inter-ties to neighboring states. Thus, absent market rigging, Texas’ gross oversupply of electric generating capacity -- presumably producing electric power at lower average cost than the previously constructed units -- inevitably will force down power costs on average with or without regulation.

Texas’ plans to deregulate retail electric sales didn’t attract electric generators to the state any more than they were attracted to other jurisdictions. What is different about Texas’ power generator boom is that the state’s land-use planning system and transmission grid made it possible to more quickly and more easily construct units that were difficult to site and difficult to connect to grids in other states.

So, what to make of all this?

After two oil shocks in the 1970s, 25 years after we tried to introduce energy efficiency, conservation and competition into our national life, we’re fighting a war with Iraq while average electricity use per home is soaring and virtually every new electric generator relies on our most valuable fuel, natural gas.

Retail electricity deregulation is more likely to worsen this situation than improve it.

Evan Wilner

Wilmington, Del.