Last month the Texas Coalition for Affordable Power released a report showing that electric prices in deregulated areas of state had fallen below the national average. That was the good news. But the report also found that Texans under deregulation consistently paid more for electricity than Texans living outside deregulation.
You can read the report here.
This brief follow-up likewise contains mixed news for the state. It reveals that Texans under deregulation have endured price increases no more onerous than increases observed in many other states. But when it comes to overall pricing trends, the Texas deregulated system ranks only fair to middling — even when compared to trends in other deregulated states.
This analysis includes five separate exhibits, each of which benchmark Texas prices against other states. To see the exhibits clearly, you need to click on them. An 11-year period between 2002 and 2012 is used for comparison purposes. This is explained in more detail below. The analysis looks only at residential electricity prices.
Exhibit 1 compares prices increases in deregulated areas of Texas with price increases in other states. Based on this metric, deregulated Texas ranked 25th among states in the continental United States. Average residential prices in deregulated areas of Texas increased by about 40.1 percent between 2002 and 2012 — or by only a slightly larger percentage that the average increase observed nationwide.
Exhibit 2 compares price increases in deregulated Texas with price increases among other states with deregulated electricity markets. Here, deregulated Texas ranks 7th among 15 states with retail electric competition.
Exhibit 3 gives us a sense of pricing trends among states heavily reliant upon natural gas to fuel electric generating units. Electricity prices roughly parallel natural gas prices in such states. Here, Texas sits in the middle of the pack. This exhibit demonstrates that residents in six other gas-reliant states endured less onerous price increases than those endured by residents in deregulated Texas. Meanwhile, residents in five other gas reliant states endured greater price increases than those observed in deregulated Texas.
Exhibit 4 compares electric prices in Texas with prices in adjoining states. Each of these other states — Oklahoma, Louisiana, Arkansas and New Mexico — remain under a regulated system. Here we see that prices in deregulated Texas exceeds those of all adjoining states.
However, as seen in Exhibit 5, the percentage increase in electricity prices between 2002 and 2012 is greater in Oklahoma than in deregulated Texas.
Note that these exhibits reference “deregulated Texas” or “deregulated areas of the state.” In Texas retail electric competition (what’s commonly referred to as electric deregulation) exists in only 85 percent of the state. Elsewhere, residential customers receive electricity from entities not subject to deregulation, such as municipally-owned utilities, electric cooperatives and some investor-owned utilities.
Also note that the pricing trends presented here begin in 2002 and end in 2012. In 2002 the Texas electric deregulation law took effect. The analysis ends in 2012 because relevant data for 2013 is not yet available.
All information is drawn from the federal government’s clearinghouse for energy data, the United States Energy Information Administration. Industry officials and regulators commonly employ US EIA data because of the agency’s impartial and consistent reporting standards.
— R.A. Dyer
Is a policy analyst consultant for TCAP, a coalition of political subdivisions in Texas that purchase electricity in the deregulated market for their own governmental use. Because energy costs are typically a significant budget item to our members, TCAP is consistently looking for ways to save our members money, through cost-saving contracts, energy efficiency or demand response programs.