But despite being rate regulated, transmission and distribution utilities have a direct impact on prices in areas of Texas with retail electric deregulation. That’s because utility rates are imbedded in electric prices charged by all competitive retail electric providers that operate in the utility’s service territory.
Over the years the state’s two largest wires companies have implemented increases that outpace inflation. These rate increases at least partially contribute to the relatively high average prices observed historically in deregulated areas of Texas. A review of regulatory filings at the Texas Public Utility Commission reveals that CenterPoint Electric has more than doubled its rates between 2003 and 2014. You can see summaries of some of those filings here.
In 2003, CenterPoint’s rates comprised between 20.2 percent and 29.2 percent of a typical 1,000 kWh electric bill, according to a TCAP analysis of PUC data. In 2014, CenterPoint rates comprised between 34.8 percent and 50 percent.
Again, all electric customers in deregulated areas around Houston must pay these rates — regardless of the retail electric provider the customers choose for service. Customers in the Dallas-Fort Worth area faced similar increases.
The Oncor utility increased its rates by more than 67 percent between 2003 and 2014, according to a review of regulatory documents. In 2003, Oncor charges comprised between 20.1 percent and 27.4 percent of a typical 1,000 kWh electric bill. In 2014, the charges comprised between 27.6 percent and 44.1 percent of a typical bill.
Transmission and distribution utility rates are non-bypassable, which means they are included in a uniform fashion by all retail electric providers that operate within the utility’s service area. The rates are set by the PUC, under regulatory law set forth by the Texas Legislature.
The state’s wires companies are active at the Texas Legislature when it is in session, and lobby for favorable regulatory treatment.