AUSTIN, Texas--(BUSINESS WIRE)--Texans buying electricity from competitive providers historically have paid higher prices, on average, than Texans receiving power from providers exempt from competition.
But a new analysis from the Texas Coalition for Affordable Power shows that the persistent price gap has dwindled to the narrowest point ever recorded – and that it has almost vanished altogether. Average residential electricity prices in areas with competition also have decreased precipitously during a recent 10-year period, while they slightly increased in areas without competition.
These findings and more are included in the new Snapshot Report on Electricity Prices found on the TCAP website. Taken together, the findings suggest that the state’s 17-year-old deregulated retail electricity market is delivering some of its best results so far for residential consumers.
“This is an encouraging report for Texans purchasing power from the state’s competitive providers,” said TCAP executive director Jay Doegey. “Although average residential electric prices in deregulated areas have remained higher over the years than prices outside deregulation, the gap is the narrowest we’ve seen — by far. Our hope is that this gap disappears altogether in future years.”
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. Residents in the remaining 15 percent of Texas do not 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.
However, not all the news is good for Texans living with retail electric competition. For instance, more limited surveys of individual deregulated-exempt municipal and vertically integrated utilities show several in early 2019 delivering better electricity prices than all competitive providers included in the surveys.
The new TCAP Snapshot Report also reveals that rates charged by the state’s two largest transmission and distribution providers have increased since 2003 beyond the level of inflation, and that these transmission and distribution rates comprise a larger proportion of home residential bills than they did previously.
TCAP is a coalition of more than 160 cities and other political subdivisions that procure electricity in the deregulated market for their own governmental use. Because high prices can undermine municipal budgets and the ability to fund essential services, TCAP, as part of its mission, actively promotes affordable energy policies. Sign up for TCAP’s free online newsletter at this link.