All customer segments saw steep price increases during the first years of electric deregulation in Texas, but recent years have been marked by price declines.

In Texas, residential consumers in areas with electric competition historically have paid more for power than those in areas without competition. The Texas Coalition for Affordable Power has documented this historic price disparity in its annual “Snapshot Reports” and our latest found the gap remained as recently as 2017.

We posted that Snapshot Report in May. You can read it here.

Our Snapshot reports typically focus on residential customers. In July, however, we went back through the underlying data, but instead with a focus on commercial customers. In August, we examined how large industrial customers fared.

This month we look at all classes of customers combined — that is, residential, commercial and industrial. As such, this analysis should provide a good bird’s eye view as to how Texas retail electric deregulation has fared since its inception in 2002.

The chart below depicts the change in average electricity prices in all sectors combined from 2002 through 2017. It includes data points for areas of Texas with deregulation, in areas of Texas without it and average electric prices nationwide.

Average Electric Rates: Texas and Nationwide, All Sectors Combined, 2002-2017.

For the most part, average rates in areas outside deregulation remained below the national average from 2002 through 2013. The only exceptions were in 2003 and 2005, when rates in areas outside competitions rose slightly above the national benchmark.

By contrast, average prices in deregulated areas rose above the national average in 2003 and continued trending generally upward through 2008. This created a sizable gap between deregulated and non-deregulated prices. In 2007, deregulated prices among all sectors of customers combined were 32.2 percent higher than corresponding prices in non-deregulated areas. In 2008, the gap stood at 26.3 percent and in 2009, it stood at 27.5 percent.

After 2008, prices in both deregulated and non-deregulated areas began to drop sharply. However, the decline was more consistent in deregulated areas. As a result, the gap quickly narrowed.

In 2011, average deregulated prices in Texas among all sectors of customers dipped below the nationwide average price. In 2014, average deregulated prices in Texas dipped below the average corresponding prices paid in areas of Texas without competition.

Average deregulated prices among all customer classes in Texas have remained below non-deregulated prices and the national benchmark ever since — or at least through 2017, which is the last year included in this analysis. An uptick in average prices among all customer classes outside deregulation was observed between 2016 and 2017.

Under the state’s retail electric deregulation law, consumers living in about 85 percent of Texas have a choice of electric providers. Consumers in the remaining 15 percent of Texas do not have similar options, and instead must purchase electricity from a single deregulation-exempt provider in their area.

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. TCAP conducts such an analysis each year and posts its findings on its website.

The data for this analysis continues through 2017.  During that year, deregulated rates for all customer sectors combined — that is, residential, commercial and industrial — were 7.9 percent lower in areas of Texas with competition than corresponding combined rates in areas without it.

We retrieved data for this analysis and for the earlier May Snapshot Report from the United States Energy Information Administration. For more information on how we use this data and to review the earlier report, go to the TCAP website here.