Deregulation in Texas costs customers more


Electricity customers in Texas who live in areas where deregulation has been introduced are paying more than their non-deregulated counterparts, according to an analysis performed by consumer advocate Public Citizen Texas. The analysis revealed that electricity costs went up 43% between 2002 and 2004 for customers living in areas covered by deregulation, while those customers served by investor-owned utilities in areas under state regulation have only faced increases of about 17%. Customers of rural electric co-operatives have fared even better, with increases of about 9%.

Public Citizen Texas compared the ‘price to beat’ rates paid by some 60% of residential customers in deregulated areas with the residential rates paid by customers in areas that remain regulated. It has been pointed out, however, that those customers who move from the price-to-beat rate by switching suppliers can avoid these excessively high rates, although thus far only about 20% of customers who are able to switch have in fact done so.

The price-to-beat rate had been set high enough to allow competitors to enter the Texas electricity market with offers of cheaper electricity – but if people decline to switch, the prevailing opinion is that this rate should be changed.