A Look Back at Texas Electric Power Deregulation

A Look Back at Texas Power DeregulationOn January 1, 2002, Texas did something that other states dare not try or tried and failed: Texas deregulated their energy market. This was no small feat. The Window on State Government reports that, “Texas produces and consumes more electricity than any other state, accounting for more than one-tenth of total U.S. energy use.” This was a remarkable moment in the energy industry.

The question remains as to whether or not these newly adopted policies worked or were an epic fail to the Texas electricity consumer. Did the consumer really end up with lower cost electric bills? Did Texas do a better job of deregulating than its predecessors? Did deregulation accomplish its goal of opening up the energy market to additional reputable Retail Electric Providers who then reduced the end-users per Kwh rate? Did PowerMax Energy fulfill its role in helping Texans save money?

What is Texas deregulation?

Prior to 2002, Texans had no say in who they chose to pay their electric bill to or any choice in the pricing . It was very similar to the situation that telecom has placed us in during the late 1990’s (remember the Bell’s and GTE?). The entire Texas electricity market was controlled by a few utilities and co-ops. When deregulation began in 2002 the market was flooded with dozens of energy companies offering a variety of electricity rates. It was unfortunate that the timing of this monumental event also coincided with a rather sharp increase in the natural gas market. Now that gas prices are starting to go back into a normal range we are seeing the benefits of deregulation appearing.

Has Deregulation Benefited the Electricity Client?

The premise for Texas electric deregulation was to give consumers a choice of who they pay their bill to and to give consumers the ability to save money on their electricity bills. It has been our experience since 2003 that our clients did benefit from lower electric rates and choice. However, in the beginning some utility providers were still charging excessive prices and blaming it on the high gas prices. The Window on State Government further reports that that in 2005 energy costs were at an all-time high accounting for nearly 11% of all U.S. energy expenditures. Now that gas prices are declining we are seeing a definite trend to lower electric rates. Texas now boasts some of the lowest electric rates in the nation. Periodically we see new clients still with their incumbent paying exorbitant rates (we’ve actually seen an $0.18 residential electric rate!) but the client is absolutely thrilled when they make the switch and start saving money on their electricity.

I’m sure you have heard all the radio spots and T.V. commercials where the REP’s are boasting their newest low rate programs. Due to all the competition in the Texas electricity market we now have the privilege to take advantage of electric choice and choose who we pay our bills to and choose how much we are willing to pay for energy to be delivered to our homes and businesses. A few good things that have come from deregulation and the competition for your home/business is online accounts, auto-pay discounts, prepayment plans, smart phone apps, integrated meter technology, smart meters and a plethora of available information about energy saving methodologies.

After watching California fail miserably with its deregulation attempt Texas made a very bold move in deregulating (that’s just how we roll here in this Great State). There have been a few kinks along the way but all-in-all it has been a very pleasant experience that has allowed Texans to have a choice in their provider and a choice for lower electric bills. It has been a privilege to be a Texan helping Texans find their way through this deregulated energy market.

About Wendy Merritt

Wendy Merritt has written 11 post in this blog.

Wendy Merritt is a partner and Vice President of PowerMax Energy. She has enjoyed working with PowerMax Energy since 2003. When she's not hard at work, she's playing with her one of her many pets on her ranchette, singing or tinkering with technology. Wendy can be reached at 800-580-6184 ext.508.

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