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Texas Marks 10 Years Since Electric Deregulation

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(credit: KTVT/KTXA) Bud Gillett
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DALLAS (CBSDFW.COM) – This week marks the tenth anniversary of electric deregulation in Texas, but the state won’t be getting a congratulatory note from one watchdog group any time soon.

In a report Wednesday, the Texas Coalition for Affordable Power claims that the promises made for deregulation have been broken, and that Texas residents have paid the price. “Deregulation was sold with the idea that consumers were going to realize savings in electricity, that hasn’t happened until recently,” said coalition executive director Randy Moravec.

Moravec calls generating electricity a complicated balancing act. Supply must meet demand every 15 minutes.  Too much power and transformers will blow, too little of it and brownouts and blackouts occur.

He claims there have been overcharge abuses in high demand times, costing Texas consumers $11 billion. “The increases are anywhere from 9% to as much as 40% over this ten year period.”  He adds prices are finally tapering off thanks to cheaper natural gas.

The report argues that while rates have come down in Texas in recent years, state users still pay more for electricity than residents in neighboring states, including Oklahoma and Louisiana.

Major consumers, like the city of Dallas, practice what homeowners are urged to do: comparison shop among providers.

“We say ‘here’s the amount of electricity we need, here’s the time of day we need it, here’s how much we’re going to need, if it’s season and see who’s out to give us the best price,’” said city manager Mary Suhm. “For instance we might agree that during time of blackouts or brownouts that we would close some of our non-essential services, so we would get a different price for that. So the flexibility to negotiate the price has been very helpful for the city.”

The Association of Electric Companies of Texas didn’t comment directly on the report, but says it has kept up with rising demand.

In a prepared statement from John W. Fainter, its President and CEO, it said, “Texas has grown tremendously over the past decade, and the competitive market has enabled electric companies to keep up with the steadily rising demand for power. The industry’s investments in infrastructure, generation and technological innovation benefit all Texans every day by contributing directly to the state’s growth and prosperity. The electric industry is proud of its progress over the past 10 years. Electric customers in competitive areas who shop for power can pay some of the lowest rates in the country right now.”

Moravec says re-regulation isn’t necessary, but thinks the Public Utilities Commission needs a bigger hammer for any possible future violations. “The fines they levy now don’t cover the amount of profit that generators get from abusive tactics.”

In addition, he wants the PUC to “Limit the amount of potential market abuse by the generators… They have a tendency to over-inflate their prices, especially in terms of peak demand, when in the summertime when demand goes up really high.” He also urges more transparency in offers from providers.

All parties involved do encourage electric customers to shop around for the best rate at www.powertochoose.org. Moravec adds to be sure to read the fine print in case a low introductory rate gets bumped up later in the contract.

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