HBA-EDN H.B. 2507 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2507 By: Danburg State Affairs 3/15/2001 Introduced BACKGROUND AND PURPOSE Under electric utility deregulation legislation passed by the 76th Legislature, competition and customer choice will begin January 1, 2002. Under the new structure, a regulated utility no longer has an obligation to serve retail customers in its service territory. Instead, there is a designated provider of last resort (POLR) that is obligated to offer electric service at a standard rate to any customer that requests its service. The Public Utility Commission (PUC) requested proposals from affiliated retail electric providers to determine which one would be designated as the POLR in an area and provide service at the price to beat. However, problems in the California utilities market may have dampened the interest of Texas electric utility providers because only three bidders responded. In addition, PUC Commissioner Judy Walsh testified that the POLR rate is likely to be the highest rate paid by customers. House Bill 2507 requires the PUC to appoint the affiliated retail electric provider as the POLR for a service area. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS House Bill 2507 amends the Utilities Code to require the Public Utility Commission to appoint the affiliated retail electric provider as the provider of last resort to provide service at the price to beat for residential and small nonresidential customers, unless a competitive bidding process results in bids below the price to beat in a particular service area. EFFECTIVE DATE September 1, 2001.