Who benefits the most from the recent downturn in electricity prices in Texas? Apparently not residential consumers.
According to a recent report, wholesale power prices in Texas dropped 56 percent in 2009. In theory, those big price drops should trickle down to residential consumers.
But as it turns out, what Texans actually paid for home electric service dropped by less than 3 percent during that same period. According to the United States Energy Information Administration, residential consumers in Texas also continued paying more than the national average in 2009 – in fact, nearly 10 percent more. This is in contrast to years of pre-deregulation prices that were well below the national average.
Big business in Texas did a bit better in 2009. According to data from the same federal agency, electricity prices for industrial customers dropped by about 20 percent in 2009. But even industrial customers paid above the national average last year, which is bad news for the Texas economy.
Most experts agree that the recent drop in power prices relates to a precipitous decline in the commodity cost of natural gas. Gas is used to fuel many of the power generators in Texas. That means that when gas costs go down so too does the wholesale price of power. The problem is that prices for end-use consumers haven’t gone down far enough. Because of inefficiencies in the Texas market, consumers here continue to pay well above those in adjoining states with a similar reliance on natural gas, such as Louisiana and Oklahoma.
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.