I have read many articles over the last few years of how electricity deregulation in Texas is not working. I hate to jump on conspiracy theory band wagons but the news media always seems to point out that electricity deregulation hasn’t worked and give biased stats to direct the reader to the same conclusion.
When you look at the whole picture the numbers show a different conclusion than what is touted in the news. Electricity deregulation in Texas actually has reduced electricity prices for consumers in Texas.
In reality Texas consumers enjoy shopping for a cheap electric company in Texas and routinely do so and are benefited by lower prices.
If you are an electric service consumer in a deregulated area of Texas and are willing to shop for the best price you will pay far below the regulated prices you saw a decade ago under regulation by the state.
When you add in inflation to the price of electricity it comes out even better for the consumer.
Let’s consider the most competitive city in Texas for retail electricity, Houston. The Centerpoint Energy utility area covers the city of Houston and surrounding cities.
A year ago a 1 year fixed rate could be had for about 9 cents per kilowatt-hour. The variable prices you could find went for around 5.2 cents per kilowatt-hour for the first month.
Compare these rates from last year with 2001 prices when Texas was still under complete electricity price regulation by the state.
In 2001 the regulated price for electricity was 10.4 cents per kilowatt-hour in the city of Houston and cities surrounding Houston. When you factor in inflation the comparable rate as of today would be 13.6 cents per kilowatt-hour.
As of today a consumer can shop around and save about 45 % less than what you could get in the not so competitive electricity market of 2001.
Think about this for a moment, have you seen a reduction in your cable television bill, phone, groceries, taxes since 2001? In comparison electricity has been declining in price in Texas over the last few years but many other essential services have been going up.
Lower natural gas prices definitely help keep your electricity price cheap but as of right now the Henry Hub spot price for natural gas is actually 40 % higher than it was in December of 2001.
Considering Texas generates much of its electricity using natural gas this should surprise you that in a competitive market we have lower prices even with a disadvantage in the price of the raw resource we use to generate electricity.
You will find some municipalities and Co-ops in the state that charge their customers less for electricity than in retail areas but this is not true in all municipalities and co-ops and often changes. In fact right now many municipalities and co-ops are undergoing rate changes.
I have seen Co-ops and municipalities that have prices below some retail providers as of today that at one time were charging 2 cents per kilowatt-hour higher than everyone else.
I bring up the example of the municipality and Co-op to simply explain that you can’t point to the municipality that happens to be lower in price for a few months as to proof deregulating an electricity market doesn’t work.
Even with a cheaper price coming from a municipality you will still find areas of the state that are deregulated with even cheaper prices than the municipality. The problematic price difference next door such as Tyler Texas’ prices and Longview’s prices don’t give you an accurate picture.
A municipality escapes several expenses a retail electric provider has simply by being a municipality with access to public funds but even still some retail providers in Texas remain cheaper.
A common argument is also that had the state of Texas kept the electricity markets regulated prices would likely have remained unchanged. This is very unlikely when you take into account that utilities have taken on rate increases to build more power plants, upgrade transmission lines and power poles, and simply to fund operations like health care and pensions for employees.
Even under regulation news organizations would likely still banter about that the regulated electricity market has run a muck each time a price increase happens to cover these utility upgrades.
The California energy market manipulation of 2001 that had Reliant Energy charged and Enron trading managers plead guilt to market manipulation is used to explain that an electricity market should never be deregulated.
In reality California is a benchmark case study in what not to do and has allowed other states to set up a system that prevents such manipulations from ever happening again.
The Texas PUCT, ERCOT, and others police the energy market transactions that happen in Texas and have even been blamed for over policing the system causing inefficiencies in the deregulated market. If anything Texas does too much to police the energy wholesalers that deal in these very large energy block trades.
In summary, it should be obvious when looking at the whole picture that deregulation has had a huge benefit to the electricity service customer by actually lowering prices. If you want to make the competitive markets work in your favor you need to shop for the cheapest provider each time your energy contract is up. I always recommend putting a reminder to go off in your phone a month before your contract ends so you are sure to always have the lowest price a competitive energy market is able to give you.
You can read more about this topic by going to this article