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12/10/2012

Electricity deregulation still needs work, group says

Although electricity prices in deregulated areas in Texas have declined since 2008 and choices have increased, Texans still pay prices above the national average and complaints have risen, says an updated report from the Texas Coalition for Affordable Power, a group of cities and other purchasers that says it buys more than 1.3 billion kilowatt-hours of power annually for street lighting, office buildings, water plants and municipal needs. TCAP calculates that Texans have paid $10.4 billion more since 2002 than they would have had the state's electricity price matched the U.S. average. It says Texans paid on average 6.4 percent less than the U.S. average before deregulation, versus 8.5 percent after. TCAP also said complaints by electricity customers rose, peaking in 2003 and again in 2009, but have declined more recently.

Texans have paid electricity rates below the U.S. average in 2011 and so far in 2012 as natural gas prices have plummeted, the report shows. But that has only trimmed Texans' overpayment by about $1 billion compared to a similar study the group published in early 2011. Electricity prices in deregulated Texas markets rose above the U.S. average from 2003 to 2010, with the spread peaking in 2006. TCAP also questions the benefits of the state's wind power, the largest in the nation, because of the cost of constructing transmission lines to bring the power to urban areas and also its impact on reliability.

The report is available here.

-- Jim Fuquay

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