ELECTRIC DEREGULATION

What Deregulation means to consumers

On January 1, 2002, Texas Senate Bill 7 allowed Texans to choose retail electricity suppliers. This is commonly known as ELECTRIC DEREGULATION. The objective of Deregulation is to allow the competitive markets to function and regulate only the electricity components that are monopolistic and require government intervention.

Your electric bill is made up of three parts and deregulation impacts only one of them. The three parts of your electric bill are: generation, transmission and distribution. Electric deregulation changes how power generation will be bought and sold. It does not change how power will be transmitted or distributed.

Generation is the actual production of electric power, either by hydroelectric dams, coal or natural gas fired plants, nuclear power plants, wind turbines, solar cells or other means.

Transmission is the process of moving power from the point of generation (power plant) to the point of distribution (a substation). This is done by high-voltage transmission lines carrying huge amounts of electricity-up to 400,000 volts.

Distribution is the process of getting power to the consumer. This is the network of lines that connects the transmission delivery point (a substation) to homes, stores, offices, factories-anyone that purchases retail electricity.

Deregulation affects only power generation (not transmission or distribution). Currently most of the investor-owned utilities generate, transmit and distribute electricity to their customers. Deregulation requires them to separate those parts of their business which supplies power. This divestiture creates the "POWER MARKET" where power suppliers will be able to sell their electricity to the highest bidder.

CO-OPS

There are sixty-seven distribution electric co-ops in Texas. Another eleven Texas co-ops generate and transmit electricity, but they only sell electricity wholesale to distribution co-ops. San Bernard Electric Co-op is a distribution co-op; it distributes electricity from power suppliers to the members. The co-op does not manufacture electricity. As a wholesale customer (of the power supplier) SBEC pays for both electricity generation and transmission, passing these costs on the members.

CO-OPS have a choice in deregulation

Texas Senate Bill 7 exempted cooperatives and municipalities from Deregulation. Why? This is due to the fact that the services and facilities are owned by the members/customers and run on a democratic business model. SBEC's members elect their own board of directors, which in turn set co-op policy. Does this mean that co-ops can not deregulate? Absolutely not! It 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 SBEC the opportunity to wait and study the deregulated market to determine if deregulation will benefit the members.

The advantage of waiting

Regardless of whether SBEC ultimately "opts in or out" of Deregulation, it will remain your power distributor. If we become deregulated and buy power at market prices, the generation part of your bill will reflect the generation cost. The other parts of your bill (transmission and distribution) will be unaffected.

Before deciding SBEC wants to know if Deregulation has raised or lowered rates for other Texas power customers, especially in rural areas. As previously stated, investor-owned utilities are privately owned, co-ops are owned by their members. Your SBEC board of directors is elected to set policy that most benefits the members.

Make sure it's right

SBEC intends to continue serving its members as we have since 1939. We intend to keep providing the same world class customer service, personal attention and competitive rates our members have come to expect.

If Deregulation is right for our members, we intend to go ahead. But not until we make sure it's right!