Why Does Electricity in Texas Cost What It Does?

Research studies have pointed out that electricity rates in Texas may have actually increased since deregulation. But at least one study has found that excess expense continues to shrink.

Why all this confusion with electricity rates? Why has deregulation actually driven costs up for many Texans?

Let’s Shed Some Light on The Issue

Buying in bulk drives prices down for companies who buy. Just like a larger retail chain cuts prices for customers by buying thousands of units per month, retail electric providers can cut prices by buying large energy blocks and reselling them.

In a deregulated market, consumers determine the sales price by buying – or not. In a regulated market, the government sets the price, and that price may not in any way be in line with the cost of providing electricity to consumers.

In a government-regulated market, the price is set to the average cost of production. If you get your electricity from a solar source, that costs your company a lot. If you get it from natural gas or coal, you pay little. In this case, REP’s can lose big money because the government pays what it determines. If it costs an REP a high amount to deliver you electricity, their business suffers.

They can’t make those costs up anywhere. The government kept cost lower.

But in a free market, REPs can charge the rate they want. Or, as you may have already experienced, they advertise a low rate and make up the rest of their profit with fees and hidden expenses.

Currently, the sales side of electricity isn’t mature yet. That means companies still fight for your business – and you see all kinds of elaborate contracts and billing systems. And that results in the general (though not always) higher prices you see.

Your #1 Defense: Research

Instead of a single government electric service, Texas has something like 264 REPs. Of course, you can’t humanly research them all.

…But you certainly have the freedom of choice. And electric providers do exist who do not charge you hidden fees, trap you in contracts designed to benefit only the company, and who charge you only for exactly what you use.

By simply knowing what’s available and that it can be found, you have power and freedom from the tyranny many Texas electric providers attempt to impose.

Call Pronto Power at 844-621-2852 to discuss the true cost of electricity.