Is the deregulated electricity market finally paying off for Texas consumers? After all, average prices statewide have come down since 2008. Consumer complaints also are falling. Doesn’t that mean that success has arrived at last?
Unfortunately, the answer is “not yet.” As noted earlier on the Recharge Ratepayer Report, complaints are down but still remain well above pre-deregulation levels. A quick look at the relevant data also reveals that those of us living in deregulated areas have received the short-end of the stick when it comes to what we pay to light our homes. Fact is, if you live in a deregulated area, you’ve probably paid thousands of dollars more for electricity than your friends or relatives who also live in Texas, but outside deregulation.
How do we know this? The United States Energy Information Administration, a federal agency that collects information on the nation’s electricity and natural gas markets, recently released detailed pricing data for 2010. The US EIA confirms that average electricity prices are down overall, but also confirms that Texans in deregulated areas consistently have paid substantially more for electricity than Texans outside deregulation.
In 2010, the Texans who received power from providers exempted from deregulation — that is, from municipally-owned utilities, electric cooperatives, or still regulated investor-owned utilities — paid on average 10 cents per kilowatt/hour. By contrast, the average price paid by Texans receiving power from retail electric providers in the deregulated system was 12.8 cents. That’s 28 percent higher.
The US EIA also reveals that Texans under electric deregulation have paid higher average prices than Texans served by providers exempt from deregulation for every calendar year since the implementation of the law. The differential was bad in 2002, the first year of retail electric competition, but it was three times worse in 2010.
Also consider that a typical consumer paying average prices in a deregulated area has shelled out about $3,100 more over the last nine years than a Texan using the same amount of electricity, but paying average prices outside deregulation.
I don’t highlight these facts to promote reregulation. That’s not going to happen in Texas. But I think it’s important that we work toward policies to make electricity more affordable for all Texans, whether living inside or outside deregulated areas. We need this system to work. That means pursuing policies that help Texans shop for electricity, that bring more transparency to the market (check out our proposal for “standard offer products” ), and that discourage anti-competitive activity.
You can read more 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.