Texas Coalition for Affordable Power’s (TCAP) report on electric deregulation in Texas says the industry has failed to deliver, while industry and agency critics find fault with the reports price and reliability comparisons.
Texans have paid higher prices for power that is less reliable – as evidenced by two rolling blackouts – during a decade of electric deregulation, the report, Deregulated Electricity in Texas: A History of Retail Competition – The First 10 Years, asserts.
Commissioned by the Texas Coalition for Affordable Power, a non-profit including 163 municipalities and other political subdivisions, the report takes sharp aim at higher retail prices, increased consumer complaints and greater reliability problems.
Key findings of the report include:
- During 10 years of deregulation, typical electric customers paid $3,000 more than other Texans not subject to deregulation.
- Nationally, Texans paid average prices 6.4 percent below national averages before deregulation but 8.72 percent higher in the 10 years since deregulation.
- Customer complaints have risen because an increase in providers has also produced an increase in the complexity of contracts.
- Texaselectric reserve margins – which are key for electric reliability – have shifted from among the highest nationally before deregulation to among the lowest now.
- Under deregulation,Texashas seen two rolling blackouts in four years and nine reliability emergencies last year alone. Before deregulation,Texasendured only one rolling blackout in more than 30 years.
- Electric generators are seeking market changes “that abandon competitive principles” and rely upon “artificial price supports.” At the same time, generators are making no promises that they’ll add new electric supplies if they get their wish for market adjustments.
- The power grid, the Electric Reliability Council of Texas (ERCOT), has “suffered persistent management problems.”
The report acknowledges that electric prices have recently dropped but also notes that customers have endured $7 billion in “stranded costs” under deregulation that were shifted from electric generators to electric customers.
TCAP Board President Jay Dogey said recent drops in both prices and complaints are not “sufficient to offset the billions of dollars in excess costs to consumers. All this points to a market that is deregulated but still not fully competitive.”
John Fainter, president and chief executive officer of the Association of Electric Companies of Texas, said TCAP’s report fails to consider several key factors that undermine its comparisons, but that still cannot counter the fact that Texas has some of the highest electric bills in the country.
Texas Public Utility Commission Chairman Donna Nelson responded to the report’s price comparisons by re-issuing a letter she sent to Senate Business and Commerce Committee Chairman John Carona (R-Dallas) more than a year ago.
A copy of Nelson’s letter is here.
TCAP’s report is here.
![[Valid RSS]](valid-rss.png "Validate my RSS feed")
This report is crazy. I’m not denying that it’s a real economic and regulatory issue, but why did the report not mention renewable energy and carbon emissions (or other types of pollution) once?
Remember: Electric plants in Texas (population 25 million) emit as much CO2 as electric plants in the COMBINED states of New York, California, Florida, Massachusetts and Oregon (population: 86 million) http://www.eia.gov/state/state-energy-rankings.cfm?keyid=86&orderid=1 I wrote an article about this fact here: http://www.imaginaryplanet.net/weblogs/idiotprogrammer/2011/09/how-to-choose-a-texas-electric-provider-the-wrong-way/
I would gladly — GLADLY! — go with a privatized system if it accelerated the move away from fossil fuels.Maybe the renewable energy question is orthogonal to the regulation issue, but for a coalition to ignore it is scandalous.
Good post! Did you know if you use less than 500 kWh a month, you are charged a HIGHER rate? I think it is a great story to go after.
Johncoby,
A vast majority (although there are some exceptions) of all plans from all the different REPs have what you’re describing, which are called “Minimum Usage Charges.” It is actually different from REP to REP, some are at 500, some are at 800, some are at 1k. And the amount of the charges themselves are also different from REP to REP. Some minimum usage charges are $5 a month, some are $15, etc.
It’s pretty standard operating procedure for minimum usage charges. This isn’t widely known information, by the average value of 1 residential customer to an electricity company is approximately $200 per year. That’s their average profit. If a customer is using an extremely low amount of power, less than the estimated amount of energy an electricity company has budgeted and bought in advance.
Minimum Usage charges basically kick in when an electricity company is taking a “loss” on a customer’s usage and counteracts the cost of employees, monthly reporting, etc, for that customer.
Of course, that doesn’t mean a discerning shopper who is actively looking to conserve electricity shouldn’t research and find a plan with no minimum usage charges. You can find all of that information listed out in the Electricity Facts Label.
Hope this helps.
The report from TCAP is biased, based upon poor and incomplete data, and tacitly blames deregulated electricity for mitigating circumstances like the weather and drought. It ignores and makes no mention of key facts such as the population explosion in Texas over the last 10 years and it states as fact that the rise in complaints can only be interpreted in dissatisfaction.
Of course, TCAP has their own personal agenda in that document as well.
I’ve been breaking down the TCAP report and the flaws and fallacies therein the past several days, with more reports to come. If you like, I’m happy to send you links, but I won’t post them directly here. I’m not interested in driving traffic to my blog as much as I’m attempting to comment to your readers that there are strongly differing opinions on TCAP’s report from people other than PUC officials and REP advocates.
Hello James, I am agree with you, the post is really nice. It will be will be helpful for Business electricity pricing and saving money as well.
Hello there, it good to here me that Texas Coalition for Affordable Power Release Report on Electric Deregulation, really nice blog. I loved to read this. Will surely help me in Comparing electricity rates as well.