HBA-SEP H.B. 2505 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2505 By: Danburg State Affairs 3/15/2001 Introduced BACKGROUND AND PURPOSE The price to beat is a pricing component that is intended to foster competition for residential and small commercial customers and is set by applying a six percent reduction to the total bundled electric rate in effect on January 1, 1999 for that customer class. Under current law, the price to beat takes effect January 1, 2002 and expires January 1, 2007. During this period, the affiliate retail electric provider of the local utility is restricted from charging residential and small commercial class customers rates that are different from the price to beat in its traditional service territory until non affiliated retail electric providers serve 40 percent or more of the load for that customer class or a period of 36 months has elapsed from the start date of customer choice. Certain unexpected events have occurred in the electric market, and consumers may need assurances that the state will proceed into a deregulated electric market with the proper safeguards and oversight. House Bill 2505 extends the price to beat expiration date past January 1, 2007 if certain conditions are not met. 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 2505 amends the Utilities Code to conditionally extend the price to beat expiration date past January 1, 2007. The time period is extended if the Public Utility Commission determines that, for service to residential and small commercial providers, less than 40 percent of the electric power consumed by the customer class within the affiliated transmission and distribution utility's certificated service area before the onset of customer choice is committed to be served by nonaffiliated retail electric providers and there are not viable and effective competitive alternatives for the respective customers who have not chosen to be served by a nonaffiliated retail electric provider. The bill specifies that the affiliated retail electric provider is prohibited from charging rates for residential or small commercial customers that are lower than, rather than different from, the price to beat until competitors serve 40 percent of the load for that customer class or a period of 36 months has elapsed from the start date of retail choice. EFFECTIVE DATE September 1, 2001.