BLOG: Report Has Mixed News on Electric Prices

Average residential electricity prices in areas of Texas with retail electric competition have declined during a recent 10-year period, while simultaneously increasing in areas exempt from electric competition, according to a new report released this week by a city coalition.

The report also found that the average price of electricity for Texans in areas with retail electric competition dipped below the national average price during 2015. This marked the third time in four years that average residential electricity prices in deregulated areas of Texas fell below the national average.

But the news is not all good for Texans livings in areas with retail electric competition. For instance, average residential electricity prices have remained consistently higher in those areas, as compared to deregulation-exempt areas. This has been true for every year for which data exist to conduct this analysis.

The report, issued this week the Texas Coalition for Affordable Power, can be found on the TCAP website at http://tcaptx.com/reports/snapshot-report-electricity-prices-texas-july-2017.

TCAP executive director Jay Doegey said that the now report suggests that the deregulated electric market in Texas is maturing.

“But it’s also true that electric pTCAP executive director Jay Doegey said that the now report suggests that the deregulated electric market in Texas is maturing.rices historically have been significantly higher in areas with retail electric deregulation, as compared to other areas of Texas,” he said. “We’re encouraged by the price declines, but more progress is needed.”

Under the state’s retail electric deregulation law, consumers living in about 85 percent of Texas can shop for electricity in much the same way they can shop for cell phone service. But residents in the remaining 15 percent of Texas don’t have similar options for service, and instead must purchase electricity from a single deregulation-exempt provider in their area.

This bifurcated system — with some Texans receiving service in deregulated areas, and others receiving service in areas exempt from deregulation — provides a unique opportunity to compare prices. The new analysis reveals that average residential electricity prices in deregulated areas remained higher than average prices outside deregulation for every year from the beginning of deregulation through 2015, which is the last year for which data exist to conduct the analysis.

Texans in deregulated areas could have saved thousands of dollars individually — and billions of dollars in the aggregate — had they paid the same average prices as those observed in areas exempt from the deregulated system, according to the analysis.

The new TCAP Snapshot Report also reveals that rates charged by the state’s two largest transmission and distribution providers have increased in recent years beyond the level of inflation, and that these transmission and distribution rates comprise a larger proportion of home residential bills than they did in previous years.

Transmission and distribution charges are “non-bypassable,” which means that all electric customers in a given region must pay them, regardless of the retail electric provider the consumer has selected for service.

TCAP is a coalition of more than 170 cities and other political subdivisions that have joined together to purchase electricity for their own governmental use. TCAP cities are located in deregulated areas of the state, and purchase power from competitive suppliers.

You can find the new Snapshot Report on Electricity Prices and other TCAP reports at TCAPTX.com.