How Competitive is the Texas Electricity Market Really?

Back in 1999, then governor of Texas George Bush signed the law that deregulated the Texas electricity market. The goal was to increase competition and force down prices for consumers.

There has been some intense debate as to whether deregulation has actually decreased prices for consumers.

So, let’s take a look at some of the evidence to see what’s really happened since deregulation:

1. What the Public Utility Commission of Texas January 2019 Report Found

The Texas Public Utility Commission created its 2019 Scope of Competition in Electric Markets report, which interestingly, is required by law.

So, what did their formal inquiry find?

Well, it found plenty of competitors for the residential market with 116 REPs total. 77 of those solely support electricity generated from 100% renewable sources.

That’s all fine and dandy. However, what’s the bottom line? Have prices increased or decreased since deregulation?

Well, prices have actually fallen by about 31% since deregulation officially took effect in 2001. See this table from the Public Utility Commission’s report:

2. …But There’s Plenty of Hotly-Contested Debate

Some groups argue that deregulation has actually caused rates to rise higher for Texans than they otherwise would be. For example, electricity prices have fluctuated for some because of the natural gas used to generate that electricity. Natural gas prices have swung up and down over the years, and sometimes wildly so.

In addition, REPs are free to charge basically whatever rates they choose. So, some have come up with misleading “deals.” For example, they may offer rates as low as 2-3 cents per kWh, only to nail you with a $100+ charge if you use more than 1000 kWh in a month – a very reachable threshold for small families.

That then balloons your costs to 20-23 cents per kWh when the average Texan pays around 11.5 cents per kWh.

Consumers, to their own detriment, also don’t put shopping for cheaper electric rates higher on their to-do lists. So, they often don’t actually get some of the better deals.

3. You Must Do Your Own Research

All of the articles reviewed for purposes of creating this post didn’t reveal that Texas consumers pay more for their electricity than they did back when we had just one electricity provider.

The only situations that we could find involved deceptive deals. However, consumers do have the power to do their research and choose a company with clear and fair rates.

So, it seems from our research that electricity prices have indeed fallen substantially in the past 20 years.

But, you just have to be a little careful when evaluating offers. What we have in Texas is not a perfect system. But it appears better for consumers than the one we previously had. And you have the power to make a decision that truly saves you more than ever before.