Paper: Lessons Learned From The Deregulation Of The Texas Electricity Industry And The Challenges That Lie Ahead

The deregulation of the Texas electric utilities has created many opportunities and challenges for oil and gas producers. Questions continue to be asked regarding how oil & gas producers will purchase power. With the enactment of 1999's Senate Bill 7, electricity buyers are beginning to find out the "devil is truly in the details". Challenges when purchasing electric power include reviewing contract terms and conditions; determining (deciding on (or selecting)) the most suitable contract duration; analyzing complicated pricing proposals and their links to gas markets; determining the optimum pricing options. The buyer's challenges continue with billing and collection issues such as ancillary charges, profiling, bill formatting and delivery options, and procedures for contesting billings. As Retail Electric Providers fight to establish market share, more creative and innovative pricing options will become available. Minimizing power costs will require producers to keep both eyes open: One eye on the power markets to make the best power purchases they can, and the other eye on their operations to optimize power use.