The experience for commercial customers under the Texas electric deregulation law has been different from the experience for residential customers.
Individual Texas residential consumers buying electricity from competitive power providers historically have paid more than Texans buying power from providers exempt from competition. The Texas Coalition for Affordable Power has documented this historic price disparity over the years and our latest Snapshot Report on Electricity Prices found the gap continued as recently as 2017.
We posted that Snapshot Report in May. You can read it here.
In June we went back through some of the underlying data, but instead with a focus on commercial and industrial customers — that is, not on residential customers — and we examined prices for a single year, 2017. You can read that supplementary June analysis here.
This month we take yet another look at the underlying data from our earlier Snapshot Report — but now with a focus on commercial prices only, and over the longer term. That is, we will not include here residential or industrial prices, just those for commercial customers like super markets and dry cleaners, and we examine those prices for most of the history of retail electric deregulation in Texas.
The chart at right shows those average prices from 2002 through 2017, and includes data points for areas inside deregulated Texas, in areas of Texas outside deregulation and average commercial electric prices nationwide.
What we found is that like residential customers, commercial customers paid comparatively higher prices under Texas electric deregulation for much of the system’s history. The chart shows that average commercial rates during the first decade of deregulation were higher, on average, than corresponding rates in areas of Texas outside deregulation.
But the trend line began to change around 2008. In 2009, commercial rates in deregulated areas of Texas dropped below commercial rates nationwide. By 2012, average Texas deregulated commercial rates dropped below corresponding rates in areas of Texas exempt from deregulation. Available data show that trend has continued.
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 this analysis each year and posts its findings on its website.
Supplementing information from TCAP’s most recent Snapshot pricing report, the chart above shows that, on average, electricity prices for commercial customers in deregulated Texas were 17.6 percent lower in 2017 than corresponding prices in deregulation-exempt areas of Texas. By contrast, Texas residential customers under deregulation paid about 1.9 percent more, on average, during 2017, as compared to residential customers in deregulation-exempt areas of the state.
We retrieved data for this analysis and for the earlier May Snapshot Report from the United States Energy Information Administration. For more information on the use of this data and to see the earlier report go the TCAP website here.
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.