February 6, 2008 admin

Public Utility Commissions (PUCT) Answer On "Is Deregulation Working?"

Public Utility Commission of Texas Talks Straight

The PUCT today explained why deregulation may not be working as planned in some areas of the state of Texas. There is not a whole lot of data prior to Texas deregulating the electric rates in 2002 but what information we do have has remained inconclusive at this point. Right after deregulation we saw several large electric monopolies become deregulated. “Deregulated” just means that the state of Texas has unbundled the pole and wires charges from the “retail energy rate”. The reason they unbundled the rate is because the pole and wires company is an altogether different operation from the energy trading desk that buys energy in the form of natural gas and other commodities and resells it as electricity to commercial and residential customers. Once the rate was unbundled any new Texas electric company that wanted to could open up business and sell the retail energy to customers while the same pole and wires company you have always used passes through the pole charges onto the electric bill with no markup. If you have picked an alternate electric provider since deregulation you can actually still see the pole and wires company number on the bill in case of an electric outage. The number on the bill helps to confirm to Texas energy customers that they still deal with the company they always have when it comes to the electric service infrastructure and transmission.

An Example Of A Deregulated Electric Utility

TXU Electric Company was deregulated back in 2002 and as you may or may not know they kept their same name when they became an independent Texas electric provider. That means that their pole and wires company was called TXU and their retail energy company was called TXU even though they legally could not be affiliated with the pole and wire division. They were basically two altogether separate companies because legally there could be coercion if they were still affiliated. Imagine if you switched to a different retail electric provider and “TXU” the pole and wires company decided they would get you back by raising your TDSP charges on your bill which covers the pole, wires and meter maintenance? This would be a good way to keep people from leaving TXU since pole and wires charges can sometimes make up 50% or more of your Texas electric bill.

TXU Electric Delivery Had To Rebrand

What ended up happening because of continuous fear and confusion, because the name was so similar to the old monopoly, was a complete rebrand of the pole and wires part of the company. TXU Electric Delivery had to rename themselves “Oncor Electric Delivery” in order for people to distinguish between TXU (The Retail Electric Provider) and TXU (The Pole and Wires Company or TDSP Company, now called Oncor). Even after reading this lengthy explanation many people will still have no idea that TXU just sells the electricity (a paper transaction bought and sold on commodity markets and hedged) and no longer maintains the poles, lines and meters. Even as of today you will still see TXU Electric Delivery as a brand name for Oncor Electric Delivery even though they are no longer called that. Oncor even owns the name “TXU Electric Delivery” although imagine if Microsoft found a company using their brand name even if not in the same line of work? Microsoft would sue their pants off and the company would immediately need to cease and desist all use of their brand name. This is not the case with Oncor as they use Oncor and TXU interchangeably which helps in the confusion process and brings in multiple electricity customers back to TXU Energy Retail Electricity. It would appear that Oncor using TXU as a part of their brand name is an effort to help TXU Energy Retail gather new and existing customers even though they are no longer the same company. Many people call TXU Energy to have their electricity turned on thinking they are calling the poles and wires company. TXU Energy signs the new customers up left and right because of this confusion process and there does not appear to be any end in site. The rate is usually not very competitive in comparison to other retail electric providers in Texas and neither does it need be considering that these customers are signing up on a brand they believe to be their only choice in “turning on new electric service”.

Example of An Alternate Texas Residential Electric Provider To Compare With TXU: Startex Power is currently the cheapest provider: learn more and Champion Energy comes in second place.

Oncor Maintains The Poles, Wires and Meters

So what have we learned? Oncor reads your meter and maintains the electric infrastructure in North Texas. They are the ones who pass through your TDSP charges on a 1 to 1 basis on your retail electric bill. The reason they are called pass through charges is because most retail electric providers like, TXU Energy, Gexa, Startex, Spark, Champion, Bounce Energy and multiple others do not markup the TDSP charges from Oncor but pass them through on a 1 to 1 basis. There are a few Texas electric providers who do in fact markup the TDSP charges while offering a competitive retail electric rate. What ends up happening is you believe that Oncor has past through those charges with no additional markup on your bill, which is the only company who can since they own the electric infrastructure in North Texas. You receive a competitive retail electric rate with no indication, except in fine print in the energy contract, that the TDSP charges have been marked up by the retail electric provider (not Oncor). This allows a few retail electric providers to come away with extra profit margin until the PUCT of Texas makes this an illegal deceptive trade practice. Until the PUCT does something about it some electric providers will continue to do this until bad publicity catches up with them.

No Historical Data On TXU Energy Electric Rates Prior To 2002

There is not a lot of data showing what the last previous 2 years prior to deregulation showed for what electric rates were at for TXU Energy. This information would be useful in understanding what the Texas retail electric rates have done before and after with TXU since deregulation began in 2002. What we would need is the electric usage data file going back before 2002 for a particular company or residence. This can be obtained from Oncor Electric Delivery in the Dallas and East Texas area and from Centerpoint Energy in the Houston area. We would then need some corresponding electric bills prior to deregulation. Any electric bills before 2002 will prove helpful. We can then compile the data and give some estimates of what electric rates have done before and after Texas deregulation in regards to TXU Energy. We would also take into account what natural gas prices have done since deregulation began. There was a time right after deregulation when natural gas spiked up to some historical highs which caused electric rates to drastically rise. This rate spike made it look like deregulation was having the opposite effect that the state of Texas was expecting.

If you have old electric bills and usage data please feel free to fax it to 1-903-484-9222 and we can use it in our analysis. We appreciate your help in this matter.

Texas Deregulation Debate, What Is the Current Controversy?

The debate right now is whether or not Texas deregulation actually caused electric rates to go up instead of down. Many people believe that NOT breaking up the monopolies would have been a better choice. Their reasons have to do with several factors.

Factor 1

One reason has to do with the natural gas spike back in the beginning of 2002. Natural gas has a 90% correlation with electric rates in Texas. Because natural gas spiked so did Texas electric rates and this was at the same time Texas unveiled deregulation. Timing was very bad in this case in giving the Texas public the perception that deregulation works to reduce electric rates.

Factor 2

The second popular reason is that city municipalities and coops near deregulated towns often pay a few cents kWh less for their electricity then the deregulated city next door. These city owned municipalities and coops give the public the perception that deregulation has done nothing but raise rates. The factor that people are not recognizing is that the prior monopoly retail electric providers like TXU, First Choice Power, Entergy, WTU, Reliant, and CPL may have had abnormally higher electric rates then some of the smaller city owned coops and municipalities. The only way to know for sure if this is the case is to provide historical electric usage data and historical electric bills prior to 2002 from one of these retail electric monopolies also known as Texas Affiliate electric providers. You can send us your historical bills and usage data and we would be glad to investigate.

Please call us at 1-800-971-4020

Factor 3

Another point to consider in regards to factor 2 is that not all city owned municipalities and coops have cheaper electric rates then the deregulated Texas electric providers. Take for instance the city of Garland Texas. The city of Garland has many times had higher electric rates in comparison to competitive Texas electric companies like Champion Energy or Startex Power. There are several other municipalities that have historically had much cheaper electric rates then the competitive Texas electric providers in the deregulated counties of the state. One such provider is in the cities of Longview and Marshall Texas. SWEPCO also known as AEP is not deregulated in these areas and is a few cents cheaper then cities just outside of it like Tyler Texas. The only explanation as to why they are able to provide a cheaper electric rate would be related to less advertising dollars spent at competing against multiple other electric companies. Texas has made the record books at being the most competitive electricity market in the world and AEP SWEPCO has avoided the issue of needing to compete with other providers by having absolutely no competition in this area of Texas. They also have the added pressure of needing to keep the rate low so that the city does not decide one day to deregulate the area because of being overcharged by their monopoly electric company. Longview must also contend with the fact that by deregulating the area they could bring in new businesses and jobs to the city which gives them more tax dollars. In the end a Texas city or county may decide to deregulate because the electric rates would be cheaper, they could add tax revenue and new jobs, and the possibility that Texas Energy lobbyists have swayed them.

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About the Author

admin Donny started ElectricityBid.com back in 2007 from his parents basement and has since married his wife Melody and had three sons, John Adam (7) and Noah (4) and our new 20 month old son. He enjoys tech related things, softball, kickboxing, going to the gym, excursions and activities together with his wife Melody. Our service allows you to shop and compare commercial and residential electric rates and providers. Would you take the time today to try our service and see how you like it. Thank you! and God Bless You!

Comments (16)

  1. easyridertx

    Texas deregulation is a complete TOTAL failure. I recently entered a random address in Austin and was SHOCKED the regulated rate Austin gets was .0072 much less than I could get on power to choose dot org. Pretty nice break for the politicians and staffs don't you think while the rest of are drowning

  2. Mary Abbott

    Deregulation obviously has nothing to do with providing the majority of people with affordable power. How are the more than $200,000,000 given to John Wilder for increasing the stock price of TXU a moral payoff? This pure, corrupt greed on the part of electric providers and anyone in the Texas Legislature or national government should motivate Texans to rid themselves of all vestiges of so-called "compassionate conservatism". Regulate, REGULATE! My electric bill has more than doubled over 2002.

  3. Lumpy

    ..can't write much, just gotta keep trying to pay all my bills including my 24 cent KWh Amigo screwjob $700 oops it takes a month plus to switch provider bill. Gee how stupid am I for living in a deregulated area and forgot that my fixed plan ended (didn't help that Amigo fails to notify either on the monthly bill or via any correspondence)..

  4. David Bryant

    Deregulated… I feel that Congress and or the State should launch a full investigation on the local Houston Power Providers. It all stink high heaven. My 80-Year-Old Mother had her power cut off because of a breakdown in communication in the system not for the lack of payment. They are shutting the power off at will with no exceptions of the Elderly, Disabled, or medical needs of power. Sorry to say but our Government Leaders and We the people have aloud these companies to become these heartless, gutless, unethical, people with no moral responsibilities. The only thing that matters to them is making money at any cost. The rates are unaforable and out of control in Houston the provider seem to be playing games with us with there contracts. The people that are getting hurt by all this is the people that can't afford the most.
    Again,It all stink high heaven.

  5. David Bryant

    My 80 year-old Mother had her Power cut off by Center Point Energy yesterday at 11am. Aug 04 just before the storm. Because when she made a power provider switch to Dynowatt. Centerpoint rejected Dynowatt’s order. According to Dynowatt because she already had a provider of TXU.
    TXU sent out a request to Centerpoint for a finial meter reading to Centerpoint and instead Centerpoint came out and cut off her Power. When the Centerpoint man came out my mother begged and pleaded with the man not to cut off her Power that she had paid her bills and had never had a late bill. The man cut off the anyway. She tried to explain that it could be a provider switch problem and could he please check on the problem first and please turn the power back on. Then the man said if she could give him her driving licenses he could turn the power back on. She complied and he turned the power back on and then went back to his truck, but return and said to mother, he was going to have to cut the power back off, because his supervisor said no turn the power off, so he did.
    I spent the better part of the day back and forth with the Providers and Centerpoint trying to get thing strait so she could get her power back on, but no one would accept responsibility for that any wrong on there part or that it was all a mistake with the system. Everyone one wanted to push the blame to the other guy and did not care that she was without power. This should not have happened to any elderly or disabled person, but instead my Elderly Mother would be punished for their mistakes, without power, and is now told she will have to sign up again for a Provider and now wait four to five days to have her Power restored and will now have to pay a reconnection fee as well.
    It is truly a sad Day in this world when the Elderly and Disabled can be abuse in this manner by these Companies with on recourse for those being abused. Watching there TV commercials they would have you to believe that they are the most caring people that wants your business, but in reality they are the most heartless, gutless, and uncaring people that hide behind there mistake and the only thing on there mine is your money at any cost. Their job seems to be to make things as hard as possible for the people they are to serve.
    My Mother just wanted to get a more affordable power rate but ended up getting more then that. She still does not have power on and now will have to pay a reconnect Fee. It did not matter to these companies that she had a limited income or that she was elderly and was going to loose all of her food for the month in her refrigerator. To them that is someone else’s problem they have no ethical or moral responsibility anyone basic needs.
    Sorry to say but our Government Leaders and We the people have aloud these companies to become these heartless, gutless, unethical, people with no moral responsibilities. The only thing that matters to them is making money at any cost. The people that are getting hurt by all this is the people that can't afford the most.
    I tried to get help from the Adult Protective Services for abuse of an Elderly and Disabled Persons and filed a abuse case on Centerpoint Energy for the abuse of an elderly but later I was to learn much to my surprise that the Adult Protective Services cannot do anything to protect the elderly or Disabled from the abuse of a Company. They can only protect the Elderly and Disabled from the abuse of a Family member or help with some basic needs until that person get back on there feet.
    I have e-mailed our City Leaders but have not heard from them yet but I was hoping that just maybe there is something that they could do at the City level to prevent this sort of thing from happening in at least our City. It would be great if the Leaders of the City would take a stand on this Issue and set the course for other City to follow. I believe in my heart that is a noble thing to do for our elderly and disabled.
    I was told today by the caseworker for the Adult Protective Services that this was more wide spread than you may think. It is happening here and through out Harris County. Many elderly and disabled and some on life saving machine or being affected by these Company and it would take a few of the elderly or disabled to Died from this type of abuse before something would change. At this point there is very little to be done about it until it brought out in the open and is some sort of action is taken.
    I think there could be something done at the City or State levels to prevent these Power Companies from turning off the power to an Elderly or Disabled person for any reason are at least have some type of safe guard in the system or a waiting period before the power is cut off. They seem to be doing so without the re guards of there basic needs.
    There seem to be a number of laws and or rules that will have to take place to change the mine set of these Power Companies or we will have see some of the Elderly and Disabled die from and event caused by these Companies and only then maybe the State Senators or Congress will kick into gear. I feel that Congress and or the State should launch a full investigation on the local Houston Power Providers. It all stink high heaven. It is the responsibility of our Government to fix what they have aloud to take place and it is my feelings that they have a moral responsibility see that these Companies or operating in a moral and ethical matter.
    This is a very important issue that needs to be resolved with a high priority. Before someone dies from affects caused by these Companies actions. Someone must act quickly before it’s to late.
    Is Deregulation Working No it has caused more problems than its worth.

  6. john in galveston

    My contract with Commerce Energy was comming to an end, I diligently found another company to go with and per my contract, I got it very close the the (1 year) contract end date. Not close enough, apparently 1 year is 12 bills, not 365 days and so I went into 1 month at their variable rate. 27.5 cents per hour!!!! My previous contract with at 14cents and the current variable rate is 16 cents! My bill is over $700!

    Crooks! I am not in favor of the government fixing my problems but geez someone should look over this! This is highway robbery!

    If electricity and gas prices are a global economy then why are the rates for electricity in Canada TODAY under 8 cents per hour! Where is our money going!

  7. j m kester

    The experiment of electricity deregulation(E-D) in Texas has proven to be a failure. E-D needs to be re-invented or scrapped. In current practice, E-D is not working as planned and is only serving to pad the pockets of some opportunistic businesses according to reviews that I've read of some Retail Electric Providers(REP).

    E-D in the Houston area has produced no tangible benefits to the consumer. On the contrary, the only effects of deregulation I have seen is higher electric rates along with my annual anxiety and frustration as the contract expires with my current REP and I must again chose a REP and a plan for the following year. While making this decision, I must be very mindful of the 14 day window permitted to make a REP change, or else, I could fall into the trap set by my current provider called the "early termination fee" and be forced to pay some exhorbitant, undeserved fee.

    Unfortunately, the consumer is purposefully placed at the disadvantage in this process. The consumer is presented choices, but exact and understandable contract terms are not fully disclosed, intentionally misleading, omittted or worse. It is impossible for the consumer to make a wise and informed choice for an REP and a plan, without all fees, charges, conditions and other terms being fully disclosed, understandable and comparable for the consumer.

    The Public Utility Commission of Texas (PUCT) publishes a well know website http://www.powertochoose .org, touted to help the consumer make a wise and informed choice for a Retail Electric Provider. The website shows REP offers conveniently sorted from lowest to highest price (cents/1,000Kwh), but the lower price offers may be quite misleading for the unwary consumer and are not truly comparable:

    For example:
    a)the low rates for (1)one-month terms (i.e. month-month) will generally jump 30-50% on subsequent months.
    b) the low fixed-rates for some longer terms ( 6, 12, 24 months) may be "unbundled" and NOT include significant, variable electric utility charges (ex: fees for transmission & distribution (i.e. TDU), fuel, monthly fees) which ARE included in other's rate plans.
    c) PUCT's Consumer Complaint Score for comparison not prominently displayed.

    Even though E-D was fathered by the Texas legislature, the PUCT is the nanny but has been remiss and inattentive to its responsibilities. When the doctrine of "caveat emptor" applies to the sale of an essential consumer commodity, in which such sale is monitored and "regulated" by a governmental agency, it is abundantly clear that there is something terribly wrong with that governmental oversight. The PUCT's own website (www.powertochoose .org) advises the consumer to "ask each provider" abouts its offer, while in full knowledge that the terms written on the Electric Facts Label and Terms of Service document would apply to any contract the consumer signs and not what some telephone representative says. If the "Electricity Facts Label" is are NOT the FACTS; why not? The administrators at the PUCT need to review and recommit to the first tenet of their mission statement "to protect customers", since I sure don't feel protected.

    Some fine first steps would be to revise and fully standardize the "Electricity Facts Label" and portions of the "Terms of Service" document to fully disclose all contract terms, permit straight forward comparision of REP plans by the consumer and avoid all billing suprises and many other complaints as well. Additional steps could be made to make the http://www.powertochoose.org website more helpful for consumers by standardized forms, full disclosure and true comparisons. Perhaps, web-links to independant REP reviews could be considered. Also, strongly suggesting that the REP's amortize their "termination-fee" over the contract term. To fully appreciate and grasp the effects which E-D has had for the average rate-payor, the PUCT should earnestly seek the comments, experiences and opinions of deregulated electricity consumers.

    I naively presume that the legislature's motives were pure when instituting E-D, but something has gone terribly wrong (for the electric consumer) as painfully demonstrated by the following facts: Our neighbors to the west in Austin and San Antonio (with municipally-owned electrical companies) who cleverly chose NOT to adopt E-D, are enjoying some of the lowest electric rates in the country, while Houstonians endure rates that are as much as 150% times theirs and among the highest in the country.

    I believe the politicians and their appointed bureaucrats owe us an explanation.

  8. Lee

    Anyone that's supportive of this criminal conspiracy to defraud the public by so called deregulation is affiliated with a power provider or they have their head buried in the sand. Where is Gods name is the competitive process that was supposed to lower rates and benefit the consumer? These providers share info on the address and the consumer and in Federal law this is often referred to as "price fixing" and lets go ahead and add conspiracy to the list of charges while we're at it. Public servants (elected officials, senate, state office) abusing their power as public servants for personal gain.Why else would they be so quick to organize and authorize a system that basically held a gun to the head of the consumer and made them pay what they were TOLD to pay? Without competition…that's a load of crap when they all communicate and share info to price fix.

    This Texas state legislature is involved in this criminal conspiracy and should be investigated just as the Illinois Gov was prosecuted for attempting to sell political power. Texas is equally as corrupt and if ANYONE wants to continue to believe that your smiling Governor is not a part of this, and his crooked fat-cat senate,. then you deserve to be here.
    Deregulation is corruption with the blessing and support of the state. The design was done intentionally by the Texas political "good 'ol boys" that seem to have everyone fooled. They use the working class to get rich, they support (quietly thru discretion) methods to suppress wages while squeezing every penny out of the middle class with scams like energy deregulation. This is NOT a middle class friendly state to live and work in…by no means.

    Texans..WAKE UP and SPEAK UP !
    Call your Federal representatives and demand an investigation! Call the office of the U.S. attorney general and demand that they use the power of their office to investigate energy deregulation in Texas.
    Nothings even going to change until we run the fat-cats AND the socialist out of politics and get them forever OUT of the business of essential services where they can get wealthy off of what we absolutely MUST have in order to survive.

  9. Lee

    Anyone that's supportive of this criminal conspiracy to defraud the public by so called deregulation is affiliated with a power provider or they have their head buried in the sand. Where is Gods name is the competitive process that was supposed to lower rates and benefit the consumer? These providers share info on the address and the consumer and in Federal law this is often referred to as "price fixing" and lets go ahead and add conspiracy to the list of charges while we're at it. Public servants (elected officials, senate, state office) abusing their power as public servants for personal gain.Why else would they be so quick to organize and authorize a system that basically held a gun to the head of the consumer and made them pay what they were TOLD to pay? Without competition…that's a load of crap when they all communicate and share info to price fix.

    • electricitybid

      If you research how ERCOT works and how the wholesale prices are created by power marketers based on current commodity prices and look into how competitive and secretive providers are regarding their own price curves you will see that these providers are very competitive and some are quite paranoid of one another. Where deregulation has failed might be in some of the variable prices that are advertised that appear cheaper than they really are because they can be raised arbitrarily even if it does not relate to current market prices. When you look at fixed rates among different providers you are truly getting a competitive price where the best price wins. The PUCT has addressed the variable price situation and has created rules and continues to create rules to make it harder for electric companies to deceive new customers into going with a deceptively low looking price without understanding all the details but there is still much yet they need to do. If there are price fixing conspiracies out there it would start much higher up than the retail electric markets. I would look at the companies that own a large majority of the power generation plants and also act as power marketers on ERCOT to put their power out to bid. Even still these power marketers are closely watched, fined, and punished if they do something that appears to be manipulative. There is still room for trickery even with the regulators in place watching these companies and there are reports from time to to time about commodity dealers working prices in a way that does seem very suspicious.

  10. Lizzie

    Thank you for deregulation, so TXU spins off Oncor and charges ontop of electric rates line charges, about as much as half the electric bill.

    • electricitybid

      Lizzie, line charges are tightly regulate by the Texas government and as far as residential customers you are getting a good price on line charges compare dto other states. The people really getting messed over are churches because they pay a very high demand penalty. Reading the article regarding demnd ratcheting and churches may help you understand what is going on regarding Oncor line charges….check it out… http://electricitybid.com/electricity/index.php/2

  11. Lizzie

    They sell you cheap rates and then charge the living daylight out of you with delievery line charges

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