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Residential Prices & Rates


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About Deregulation

 

January 1, 2002, Senate Bill 7 brought the deregulation of electricity to Texas. The outcome was that the majority of Texans are now able to choose their own electricity provider. Since 2002 an estimated 85% of commercial and industrial customers have switched power providers at least once. Residential customers have followed suit as well with approximately 40% of eligible Texas households having switched from their incumbent providers. This is a huge transition considering that Texas is the largest electricity market in the country and falls between Great Britain and Spain as the world's 11th largest electricity market. The initial goal of deregulation was to increase competition and lower prices. In order to foster this competitive environment, the Public Utility Commission required that the larger incumbent electricity companies like TXU and Reliant Energy provide their customers with the regulated "Price to Beat" rate. The "Price to Beat" was a pricing floor established to allow profitability to new, smaller market competitors. This opened the door for competitors to come in and establish themselves as lower cost providers. In 2007 this floor was lifted leaving an extremely competitive market..


The question for some is whether deregulation has achieved its twofold goal of increased competition and lower prices. The increase in competition is not question however many do question the state of electricity pricing since the advent of deregulation. Since 2002, residential electricity rates have risen more than 7 times. The pricing increase from 2002 to 2004 was 43%. This is significant but at the same time, the cost of inputs to generate electricity (natural gas) increased by 63%. Electricity customers did not have to bear the full increase of these costs due to creative innovation in generation and market strategies.


Now, nearly eight years after deregulation began, customers have gained the market savvy to make sound determinations based on their needs. There are a multitude of retail electricity providers with a host of different price offerings that customers can choose from. The task of shopping for electricity pricing can seem daunting. Electricity prices vary by term length, price stability (fixed or variable), and then by less obvious detail such as contract language. Term lengths are important when shopping electricity pricing for many reasons. Customers are faced with the task of making a market call as to where they think electricity prices are heading and based on their judgment, how long or short should they lock a rate in. Electricity prices are subject to all of the volatility one would expect to be associated with a commodity. If you purchased gasoline for your family's vehicles in one year increments, you clearly would want to do so prices are at their lowest. Electricity consumers now have the ability to adjust their buying based around these market fluctuations. In some situations, it might make sense to lock in a short term rate, such as during a historically high pricing period. On the other hand, if pricing is at a historically low point, signing a long term agreement can be an excellent course of action. After having narrowed down companies by price, there are contract aspects such as cancellation penalties and monthly service charges to consider. Customers might want to check with the Public Utility Commission to see if the company they are favoring has had complaints filed against them. Electricity Prices and Rates only works with companies we know to have a stable track record and a strong balance sheet.


Even with nearly eight years of deregulation behind Texans, the process of evaluating electricity providers is still one that requires a significant attention to detail. That is where Electricity Prices & Rates is vital to the decision making process. Consumers want visibility into the market, the ability to make sound decisions quickly, and the opportunity to maximize electricity cost savings. We acknowledge these needs and have created the most streamlined process for meeting these needs in an independent and un-biased manner.