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Deregulation

What is deregulation?

 

In the late 1990s Texas legislators decided to restructure the energy industry, a process known as deregulation. The law separated the supply and delivery of electricity and changed the way utilities had operated for more than a century. Instead of providing and delivering electricity as they had in the past, deregulated utilities are now only required to transport power to homes and business in their service area. Consumers were given the responsibility to find and purchase their own power supply. Dozens of retail suppliers moved into Texas to sell wholesale electricity to these customers.

 

Co-ops have a choice in deregulation

 

Texas Senate Bill 7 exempted cooperatives and municipalities from deregulation. Why? Because these utilities run on a democratic business model and answer to the community rather than investors. San Patricio Electric Cooperative's members elect their own board of directors, which in turn set co-op policy.

 

Does this mean that co-ops cannot deregulate?

 

Absolutely not! It simply means that co-ops and municipalities may choose to opt in or out of deregulation, unlike investor-owned utilities who do not have a choice.

This gives SPEC the opportunity to wait and study the deregulated market to determine if making a change will benefit its members. SPEC has worked hard to get ready in case we enter the deregulated market. Although SPEC has a leg up on many of the co-ops in Texas as far as deregulation preparation and knowledge is concerned, at this time SPEC does not plan to enter the market.

 

The advantage of waiting 

 

Regardless of whether SPEC ultimately opts in or out of deregulation, it will remain your power distributor. Should SPEC choose to deregulate, you would have to buy electricity supply from a retail electric supplier (REP). However, SPEC would still be responsible for delivering that power to your home or business and maintaining the infrastructure necessary to keep your lights on.

Before deciding if this is the best course of action, SPEC wants to know if deregulation has raised or lowered rates for other Texas power customers, especially in rural areas. Without proof of cost-savings, deregulating might not be to the benefit of our members-owners. The board of directors, elected by SPEC members, will continue to monitor the situation and will only set policy that most benefits its members.

 

Make sure it's right 

 

SPEC will continue serving its members as we have since 1938. We will keep providing the same first-class customer service, personal attention and competitive rates our members have come to expect.

 

Frequently Asked Questions About Energy Deregulation

 

Q: Are co-ops the only ones that have the flexibility to wait to decide whether to opt in?

A: No. San Antonio, Austin, Brownsville, Lubbock and about 70 other municipalities are also weighing their options. These cities own their utilities and were also exempt from deregulation laws.

 

Q: Why aren't co-ops and city-owned utilities required to deregulate as the investor-owned utilities are?

A: When Texas legislators approved electric restructuring in 1999 they recognized that member-owned electric co-ops and city-owned systems are locally-based and operate under a democratic business model.

Co-op directors and members are allowed to decide what path to take. Investor-owned utilities, on the other hand, are dedicated to maximizing profits for their shareholders and were required to deregulate.  SPEC’s goal, as it has always has been, is to serve you conscientiously and efficiently at the best possible cost.

 

Q: When will San Patricio Electric Cooperative make its choice?

A: Each co-op will decide in its own time. Many will wait and see what the real costs of deregulation will be.  SPEC will opt for competition only if it benefits you, the member-owner.

 

Q: If my co-op opts in to restructuring, will I receive more than one bill?

A: Only if you request it.

 

Q: Are all co-ops against choice?

A: 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. And once a decision to change is made, it cannot be revoked. Again, co-op boards of directors and members must decide what path to take.

 

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