Written on: August 12, 2015
For the first-time ever, residential electricity prices in areas of Texas with deregulated retail electric service have remained below the national average for two consecutive years, according to a new report from the Texas Coalition for Affordable Power.
The analysis also shows a growing number of deals under deregulation with prices that meet or beat prices commonly found outside deregulation.
But despite those positive trends for Texans living under retail electric deregulation, the new analysis also reveals that electric prices in deregulated areas have remained historically higher, on average, than prices outside deregulation. All told, the “lost savings” for Texans in deregulated areas exceeded $23 billion from 2002 to 2013, according to the analysis.
These good news-bad news findings are included in a new Snapshot Report on Electricity Prices released today by TCAP. The online analysis can be found on the TCAP website: http://tcaptx.wpengine.com/report/snapshot-report-2015-electricity-prices-in-texas
“Texans living in deregulated areas have paid too much for electricity — and the lost savings has been substantial,” said Jay Doegey, executive director for the Texas Coalition for Affordable Power. “But the deregulated market is improving, and the good news is that if you shop carefully, you can find good deals. These relatively low-cost deals are more common than they were in previous years.”
Under the state’s retail electric deregulation law, consumers living in about 85 percent of Texas can shop for electricity in much the same way they can shop for cell phone service. But residents in the remaining 15 percent of Texas have no options for service, and instead receive electricity from deregulation-exempt providers.
This bifurcated system — with some Texans receiving service in deregulated areas, and others receiving service in areas exempt from deregulation — provides a unique opportunity to compare prices. The new TCAP analysis reveals that average residential electricity prices in deregulated areas remained higher than average prices outside deregulation for every year from 2002 through 2013.
That specific benchmark analysis comparing average prices inside and outside deregulated areas does not extend to 2014 and 2015 because the necessary data for those years has not yet been released by the federal government. However, the Snapshot Report also includes more recent Texas Public Utility Commission data that reveals the existence of numerous competitive deals in deregulated areas that meet or beat prices common in deregulation-exempt areas.
Such relatively low-cost competitive offers under retail electric deregulation appear to be more common now than they were in previous years, according to the TCAP analysis.
For the first time ever in a TCAP Snapshot Report, rates charged by the state’s two largest transmission providers also were analyzed. TCAP found that these rates have increased in recent years beyond the level of inflation, and that these transmission and distribution rates typically comprise a larger proportion of home residential bills than they did in previous years.
Transmission and distribution charges are “non-bypassable,” which means that all electric customers in a given region must pay them, regardless of the retail electric provider the consumer has selected for service. The TCAP findings suggest that these non-bypassable charges have contributed to the relatively high price of electricity in deregulated areas.
TCAP is a coalition of more than 160 cities and other political subdivisions that purchase electricity in the deregulated market for their own governmental use. Because high energy costs can impact municipal budgets and the ability to fund essential services, TCAP, as part of its mission, actively promotes affordable energy policies. High energy prices also place a burden on local businesses and home consumers.