AARP: Market Transparency Will Bring Consumer Savings

Written on: May 5, 2009

Want to save big bucks on your light bill? A new report sponsored by AARP proposes a no-cost policy change that could save the state’s deregulated electricity market nearly $1billion annually – or about $52 on an average bill – while simultaneously bolstering competition.

The idea is simple. Currently, there’s a 60-day time lag between when electric generators make bids into the ERCOT’s real-time wholesale electricity market and when information about those bids become public. By simply reducing that time lag to two days, the market would save $956 million annually, according to an analysis included in the AARP report.

Robert McCullough, the Portland-based utility expert who conducted the analysis, said such a change also would help protect the wholesale electricity market against unfair manipulation. He noted that Australia already employs a two-day disclosure rule.

“Additional transparency in the Texas wholesale electricity market can make substantial improvements that would lower prices to consumers,” McCullough notes in the report, which was released Tuesday during an Austin press conference.

The report also found that electricity prices in Texas increased 64 percent since the state deregulated its retail electricity market. And that “64 percent increase significantly understates the situation for consumers in deregulated areas because this statewide average includes still-regulated utilities, cooperatives, and municipally-owned utilities that have experienced far lower increases,” the report notes.

The complete report, Transparency in ERCOT: A No-cost Strategy to Reduce Electricity Prices in Texas, can be found here, on the web site of McCullough Research.

— R.A. Dyer

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