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Deregulation

Co-op member-consumers may be hearing radio and television advertising concerning electric utility deregulation. The advertising is directed at consumers of investor-owned utilities, not electric co-ops.

Our co-op board of directors has decided to wait and see how well deregulation works before committing to the experiment. The estimated cost to opt in is between $348,000 and $648,000 per year.  If we opted in our customers would have to absorb these cost.

State law required investor-owned utilities to enter the competitive market on January 1, 2002. 

Cooperatives have the option to deregulate or not.

When Texas legislators approved electric deregulation (also called restructuring), they recognized that member-owned electric co-ops are locally based and that they serve at-risk rural areas. Therefore they gave great latitude to co-ops.

In the 1930s, when the electric industry was unregulated, commercial companies had no financial incentive to provide power to those rural areas now served by cooperatives. In 2001, many rural areas are still not profitable to serve. It's unlikely that power providers in a retail marketplace will be racing to serve these residential and small-business customers. It's also doubtful that such companies will guarantee long-term service.

The co-ops goal, as it has always been, is to serve their member-consumers conscientiously and efficiently, at the best possible cost.

 

Deregulation Q&A

Are Co-ops against choice?

No. We are against rushing into anything that might not be advantageous to our member-consumers. Telephone, airline and railroad deregulation, for example, have had their down sides. Deregulation of these industries has not always resulted in benefits for customers, especially in rural areas and small communities. Once a decision to change is made, it cannot be revoked.

Are co-ops the only ones that have the flexibility to wait?

No. About 70  municipalities are weighing their options, which are the same as the co-ops'.

Why aren't co-ops and municipally owned utilities required to compete like the investor-owned utilities are?

Because when Texas legislators approved electric restructuring in 1999, they recognized that member-owned electric co-ops and city-owned systems are locally based, and that they operate under a democratic business model. Co-op boards of directors and members must decide what path to take. The co-ops goal, as it has always been, is to serve you conscientiously and efficiently at the best possible cost.

When will my co-op make its choice?

Each co-op will decide in its own time. Some may wait to see what the real costs are going to be. Your co-op will opt for competition only if it benefits you.

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