Ten years ago this month, Texas deregulated its retail electricity markets. The product of Senate Bill 7 (adopted by the state Legislature), retail electric deregulation allowed many Texans for the first time ever to choose their electricity provider. In theory, market forces would drive down rates. SB 7 also was expected to improve service.
So, after 10 years: how has Texas fared? Are complaints down? What about prices?
A new report, Deregulated Electricity in Texas, examines these questions and more. From the difficult Price To Beat years, to the challenges at ERCOT, to the nodal transition — the report tells the real story of deregulation, starting at the very beginning. It was released today by the Texas Coalition for Affordable Power (the parent organization of RechargeTexas) and represents one of the most extensive historical treatments of the deregulation law ever undertaken.
Here are a few of the highlights:
Texans in deregulated areas of the state have consistently paid higher average annual electricity rates than Texans outside deregulation. This added expense has cost a typical customer under deregulation hundreds of dollars each year.
Electricity rates above the national average have cost Texans more than $11 billion during the 10-year history of retail competition. Only recently has the trend of above-the-national-average prices in Texas changed.
Texas had the highest generation reserve margins in the nation prior to the implementation of the deregulation law. Texas now has among the lowest. This has led to serious reliability challenges for the state’s power grid.
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.