Celebrate Electricity Deregulation! Bake a Cake! But Hold the Candles. You'll Need Them.

Categories: Buzz

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While you were busy with all the holidays, another important reason for drinking heavily probably escaped your attention. This month marks 10 years of deregulation in Texas's retail electric market. Hey, put down that chair. No need for violence. This is the free market we're huzzahing here, Bub.

Actually, it was 1999 when the Texas Legislature passed the law deregulating retail electricity in much of the state. It was a couple more years before consumers could actually shop around from various power providers, creating a system intended to harness free-market competition to bring down rates.

Only it hasn't worked like that. In fact, average retail residential electric prices in Texas have been anywhere from 9 percent to 46 percent higher per year than the average U.S. price since deregulation -- at least until very recently, thanks to low natural gas prices.

You may be thinking that 10 years to get Texas's rates back below the U.S. average is not that bad, considering we're talking about government in action here. Well, yeah, except that, according to the Texas Coalition for Affordable Power, which tracks electricity prices, Texas had cheaper-than-average power rates before deregulation. Since then, electricity rates generally have been lower in parts of Texas that are still regulated.

And they're less in adjoining states ...

And in most other states with deregulated markets.

We asked Geoffrey Gay, TCAP's general counsel, why deregulation seems to not be working according to plan.

One part of the answer: Texas is filled with middlemen who neither generate nor transmit electricity but sell it, adding costs and complexity to a system so esoteric that even experts don't understand it. "The retail market is skewed, it's cumbersome," Gay said. "There's too many gotchas."

And because of the arcane way prices are calculated, power generators have little financial incentive to build new plants. Remember last year's rolling brownouts? Get ready for more next summer. All that natural gas that drillers have been sucking up from the shale and selling a rock-bottom (heh) prices also is slowing plans for green energy projects according to this report, though The Wall Street Journal wonders how much longer the gas glut can last as drillers struggle for profit.

Buzz asked Gay if it would be fair to compare Texas's electric deregulation to airline deregulation. You know: No matter what price you pay, someone else is paying less. You're never sure exactly what exactly all that stuff is on your bill, service is less reliable and big, over-leverage legacy companies seem to be not making any money.

Yes, he said, that sounds about right.

Other than that, though, deregulation has been peachy. Where's the party?


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8 comments
JWood
JWood

Some of you nits need to do some research...go check all those regulated states and see how many lines are on those bills....those regulated utility companies charge dollars here and dollars there for almost anything while not adding to the "energy charges" and claiming they are keeping the energy rates low....the total bill is your energy cost, not just the top line of the bill...in Texas we include many of those line item charges in the energy cost, and bad reporters like this one are not bright enough to figure out how it works before they write drivel to meet an editor's deadline to fill papaer space...

Jim Bob Guthrie
Jim Bob Guthrie

It's acting exactly according to plan.  It was meant to make more money for electricity companies.  That's what it did.  Don't trust Trojans bearing gifts. 

Hannibal Lecter
Hannibal Lecter

Behind almost every complaint about electric rates is someone just too lazy to comparison shop. Last summer I was paying 5.5 cents per kWh while most folks were paying twice that.

I guess it's just easier to complain and beg the government to save you from yourself.

Ralph Spoilsport
Ralph Spoilsport

Electricity prices are substantially down due to the natural gas glut. That's probably a good thing. (maybe?).

Oak Cliff Townie
Oak Cliff Townie

http://www.ercot.com/about/

Texas might be  the most regulated/MANAGED Power grid in the Nation . OKAY maybe California The Ghost of Ken Lay lives.

Deregulation was a case of out with the old and writing the new .

Claytonauger
Claytonauger

And who sponsored the Dereg bill? Former Dallas State Rep. Steve Wolens. Rep. Wolens did many, many good things during his tenure, but electric power deregulation isn't one of them.

james
james

one of the new laws for the credit card companies forced them to make the due date on the same ate every month. since then i've never been tricked into being a day or two 'late' on my credit card bill. why don't our brave legislators do this to the utility companies. they use it for an excuse to stick us with 'late' charges the same way.

scottindallas
scottindallas

electric deregulation was broadly supported bi-partisan affair.  It should be appealed immediately.

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