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12/19/2013

Texas deregulated electricity rates dip below U.S. average

Electricity rates paid by residential customers in deregulated Texas markets last year were below the national average for the first time in a decade, according to a new report. The Texas Coalition for Affordable Power, which has long criticized deregulation of the state’s retail power market in 2002, said it’s the fourth straight year that electricity prices have fallen. The group said that in 2012, Texas consumers in deregulated markets paid an average of 11.75 cents per kilowatt-hour, compared with 11.88 cents nationally.

“Residential electricity prices under deregulation continue trending in the right direction. But prices are still higher than power customers pay in areas of Texas not subject to deregulation,” said Randy Moravec, TCAP’s executive director. “This analysis shows there’s still plenty of room for improvement under our deregulation law.”

Texas electricity rates shot up along with the cost of natural gas until 2008. Then gas prices plunged, taking electricity prices with them. Natural gas drives the wholesale price of power in the state because gas-fired generators provide the bulk of peak demand. Texas markets that remain regulated and those served by municipal power companies and co-ops don’t follow the same pricing model, and their rates on average were lower than those in deregulated markets, TCAP said.

In 2012, residential customers with regulated, muni and co-op service paid an average of just under 10 cents per kw-h, according to the study. TCAP said the difference between Texas regulated and deregulated rates in 2012 amounted to more than $280 for an average residential customer and $1.5 billion for the entire state.

While consumers in deregulated areas who comparison-shop at PowerToChoose.com can buy power for less, TCAP noted that many consumers have remained with legacy power companies, such as TXU Energy in North Texas. Those providers generally charge more, the study says. TCAP’s study used data from the U.S. Energy Information Administration, which surveys rates paid by customers of utilities and other electricity retailers. TCAP’s members are 168 cities and other governmental buyers of electricity.

-- Jim Fuquay

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