Deregulation is an issue that will affect everyone. Any interruption in electric service is guaranteed to bring business, and even our everyday lives, screeching to a halt. The reliability of the system is of extreme importance to the economic health of our nation as a whole, and to the standard of living expected our citizens.
After the continuing deregulation debacle in California, few can claim to be ignorant of the issue. At the very least, everyone knows that deregulation of their electric industry is causing problems for California, and that it is coming soon to a state near you. It is in fact, just around the corner for most. The price spikes and the continuing rolling blackouts experienced in California have been reported on a daily basis, and have caused great concerns from the citizens of states considering deregulation. Texas is no exception. This concern has made deregulation a continuing topic during the Texas' 77th Legislature and probably for many more.
There is one important question in the case of electric deregulation: "Can Texas move toward competition in the electric industry, while avoiding the power problems experienced by California?" The Public Utility Commission of Texas and most Legislators answer with an emphatic, "Yes." This may be true; however, there must be a serious look at the problems experienced in California. We must also determine the impact of the growing shortage of natural gas. What impact will natural gas shortages have on the price of electricity?
For the purpose of this paper, I will look at the problems in California, making a comparison to the deregulation model proposed by Texas. I will try to explain what happened in the "Golden State" and predict what might happen in the "Lone Star State." I will also examine the possible problems inherent in the two systems and look at possible solutions.