Here’s a December reality check, courtesy Recharge Texas.
The Public Utility Commission, in a recent draft of its Scope of Competition report, makes the following bold statement: “Texas continues to be recognized as the most successful competitive retail market in North America.” To justify this assertion, the PUC cites the very important-sounding “Annual Baseline Assessment of Choice in Canada and the United States,” also known as the “ABACCUS” report.
But here’s the problem: ABACCUS is not an unbiased academic report, but rather created for and by the electric industry. This year it was distributed by an organization called the Distributed Energy Financial Group, which provides management consulting services for the energy industry. It’s also associated with an organization known as the Energy Retailer Research Consortium, which is comprised of companies with a stake in competitive retail energy markets. These reports are far from impartial.
Particularly troubling about this report is its insufficient focus on pricing. The cost of electricity is probably the single most important aspect of the electricity market to anyone not actually employed as a manager in the electric industry. This is common sense. But when ranking electricity markets nationwide, the ABACCUS report did not consider the cost of electricity for the home consumer. This is an especially shocking omission, given that the industry professionals surveyed for the ABACCUS report even listed low prices as the top goal of deregulation.
Had the ABACCUS report taken electricity prices into account, it might have reached different conclusions about Texas. For instance, while prices in the Lone Star State have dipped recently (because of fluctuations in the related natural gas market), year-to-date residential electricity prices still remain higher than the national average. This is a reversal of many years of below average prices before the deregulation law.
Here are other facts ignored in the ABACCUS analysis:
- Residents in Texas continue paying substantially more for electricity than residents in Louisiana, Oklahoma and Arkansas.
- Electric prices in Texas have increased by a greater extent than they have in most other deregulated states.
- Electric prices in Texas have increased by a greater extent than they have in most other states with a similar reliance on natural gas to fuel generating plants.
- Federal data show a consistent trend of electricity prices above the national average in areas of Texas subject to deregulation, and below-average prices in areas of Texas outside deregulation.
It’s clear from even a cursory examination of the available data that Texans should be enjoying greater benefits from the deregulated market. It’s clear that despite recent drops, the cost of electricity simply remains too high. The good news is that reform is possible. But we can’t make a fix without first acknowledging there’s a problem.