Texas Electricity Prices Are Falling, but That Doesn't Mean Deregulation Lowering Them

Categories: Biz

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Peter Ryan
The deregulation of the electricity market has been a mixed bag for Texans. On the bright side, we paid less for power last year than the national average. The architects of the energy-only market (primarily electricity generators) would call this a coup -- proof that consumer choice and the free market have driven prices down.

But that's only true if you don't examine power prices in the 15 percent of Texas that lies outside the deregulated market. And it's only true if you don't look at more than a decade of prices that have exceeded that national average. The Texas Coalition for Affordable Power, a group of cities and governments that collectively negotiate with power companies, did that very thing, and what its report reveals about deregulation isn't terribly flattering.

Its analysis shows that in areas exempt from deregulation, like Austin and San Antonio, which have their own municipal utilities, power prices have remained lower -- often far lower -- than those in the deregulated market. In 2012, despite seeing the lowest prices this market had given us so far, they still remained on average some 18.6 percent higher than those in regulated areas. It was only last year, in fact, that the deregulated market finally posted lower prices below the national average.

This has been a fundamental shift in Texas, where before the state boasted some of the lowest electricity prices in the country.

The cost of these higher prices is depressingly huge. TCAP crunched the numbers and found that if we had paid as much as those Texans outside of the deregulated market, we'd have saved $22 billion since 2002. That's about $4,500 for the average customer. In 2012 alone, the best year so far, we still could have saved $1.5 billion.

Still, prices in the deregulated market have fallen steadily since 2008, due to low natural gas prices, which usually peg the price for electricity. The irony is that this boon for rate-paying Texans is seen as a fundamental flaw in the market that needs rectifying. Power generators say the low prices make it difficult, if not impossible, to justify the construction of new power plants to keep up with growing demand.

Texas regulators seem to be leaning toward a fix: Forcing Texans to pay more. In the last year or so, they've already ratcheted up the spot price of electricity to combat the ills of low prices. Perversely, whatever savings the deregulated market is finally realizing may vanish if generators get their wish.

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4 comments
DFWconspiracy
DFWconspiracy

Aw, the poor energy companies can't build any new power plants because energy prices are so low. That's bull crap. And thank god for natural gas. It's worth the 3-pointer earthquakes. Grandma's fine china be damed.

holmantx
holmantx topcommenter

Texas' population growth between 2000 and 2010 represents the highest population increase, by number of people, for any U.S. state during this time period.   Plants had to be built which cost money in addition to operating costs.  We got lucky.  We went gas and hit the mother load on shale gas.  And EFH bet on gas before shale gas and lost.  Now they are toast and we benefit.  Too bad Wall Street.  I'm surprised you aren't yelling for a bail-out.

I don't care what San Antonio or Austin pay.  We have been mighty fortunate to have this play out like it did with the population increase we now have (26 million) and what the projections are if we keep doing what we are doing, which is stay out of the way of the reasons why people want to come here.

We got vision, baby.  

It's like reading your bizarre take on water.

As late as 1913, Texas had only four major reservoirs with a total storage capacity of 288,340 acre-feet. By January 2012, Texas had 188 major reservoirs,

According to the U.S. Statistical Abstract of 2010, Texas has 5,607 square miles of inland water, ranking it first in the 48 contiguous states, followed by Florida, with 5,373 sq. mi.; Minnesota, 4,782; and Louisiana, 4,433.

Visionary, both on energy and water.

P1Gunter
P1Gunter

@holmantx The issue with water that no one wants to talk about is who owns the right's to it. Dallas owns more than enough, as does Ft. Worthless. Denton should have enough unless their population just explodes. You know who doesn't own any water rights and is buying it from these cities? Just about every suburb. The big deal is the northern Collin County suburbs realized they are fucked if a truly severe drough hits and the cities decide to keep their reservoir rights unless a bunch of folks in Allen want to start drilling water wells in their backyard.


You're right that we got stupidly lucky about how this played out with natural gas prices, but even then moving back to Dallas from Denton (still regulated) it was sticker shock getting electric bills. It's 40mi. north and the prices were night and day.

holmantx
holmantx topcommenter

@P1Gunter @holmantx  


The Tarrant Regional Water District provides water to 1.8 million people in the North Central Texas area. Projections indicate TRWD’s service area should climb to more than 4.3 million people by 2060.  They have forty wholesale customers of which Fort Worth is only on.  The TRWD owns four lakes.

Dallas Water Utilities (DWU), a department of the City of Dallas with a service area of 2.3 million people and 27 customer cities, currently owns and operates Lake Ray Hubbard in Dallas County and has water supply rights for six additional reservoirs, including Lake Palestine in East Texas. Palestine is not currently connected to the Dallas system.

TRWD and DWU have partnered to design, build, and operate the Integrated Pipeline Project (IPL).  Part of it will connect Lake Palestine to Cedar Creek Lake with 84/96 inch pipeline so Dallas can draw equivalent water from existing TRWD infrastructure.  This will take about 20 years and is the largest public project since the DFW Airport.

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