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Power deregulation has Texans worried

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DALLAS — Texas officials say deregulation of their state's electric utilities won't bring the kind of energy problems that crippled California.

Many consumer advocates remained skeptical of the deregulation plan in Texas, which officially went into effect Tuesday. But government officials said the reforms will bring consumers lower rates and improved service.

"Today, we join 20 to 25 other states in retail deregulation," said state Rep. Steven Wolens, who co-wrote the deregulation legislation. "We're very optimistic and hopeful it will be the most successful deregulation transition in the country."

Concern about the effects of deregulation has grown since California went through a devastating power crisis in 2000 and 2001. The state suffered from a serious shortfall in energy supplies, and two electric companies filed for bankruptcy when they were unable to cover the high prices they were paying wholesalers for energy.

The crisis left consumers with rolling blackouts and skyrocketing power bills.

Officials in Texas said their state won't suffer the same fate. Texas has more electric generators and power lines to support deregulation, they said, and it had more lead time to prepare for the transition.

As of Monday, about 85,000 residential ratepayers had signed up for new electricity providers.

John Fainter, president of the Association of Electric Companies, said the law includes strict licensing requirements for providers, retains the state's regulatory oversight and protects customers against the failure of an electric company.

"I think people are naturally cautious," Fainter said. "In my view, the momentum will build up as more people get accustomed to it and study it. As the market becomes open, more people will enter the market, including retail providers."

Most consumer advocates say the Texas deregulation plan was put together more responsibly than the plan in California, but some said the Texas reforms don't do enough to protect consumers from price fluctuations.

Carol Biedrzycki, executive director of the Texas Ratepayers Organization to Save Energy, said utility companies should be required to maintain electricity reserves that exceed demand by 15 percent — something that the Texas deregulation law did not address.

The reserves would allow the state to keep prices stable if demand increases, Biedrzycki told The New York Times for Thursday editions.

Some consumers also remain wary of the deregulation plan, particularly because of what happened in California.

"It's not like I can control that though," said Willie Davis of Dallas. "If another company can save me money, then, yes, I am going to switch to them."

As power customers adapt to the new system, many electricity providers are adjusting their marketing campaigns to retain customers and lure new ones.

Texas-New Mexico Power Co. is trying to woo consumers by using live operators to assist customers rather than telephone prompts. And TXU Electric & Gas is allowing business customers to choose their bill due date, an option that will soon be extended to residential customers, TXU spokesman John Walls said.

"For a long time, customers felt they were in the position of being told what to do," Walls said. "We're giving them more control of the energy world."