Texas Coalition for Affordable Power Says Price Gap Between Deregulated and Non-Deregulated Prices In Texas Nearly Gone

TCAP: Areas With Electric Choice Have Lower Prices Than Monopoly, Non-ERCOT Areas Of State

May 30, 2019

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The Texas Coalition for Affordable Power said that while, "Texans buying electricity from competitive providers historically have paid higher prices, on average, than Texans receiving power from providers exempt from competition," a new snapshot analysis shows that, "the persistent price gap has dwindled to the narrowest point ever recorded – and that it has almost vanished altogether."

TCAP said that, during 2017, the average residential deregulated electricity price inside ERCOT stood at 11.10 cents per kilowatt hour. The average residential prices in those ERCOT areas exempt from deregulation (such as in the service territories of electric cooperatives and municipal utilities) was 10.77 cents per kWh, TCAP said

TCAP also noted that in 2017 the average residential deregulated electricity price inside ERCOT was lower than the 11.18 cents charged by non-deregulated providers in those areas of Texas outside of ERCOT

"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," TCAP said

"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," TCAP said

TCAP said that, "Average residential prices have increased in both deregulated areas and deregulation-exempt areas since the implementation of deregulation in 2002. However, the rate of increase has been lower in deregulated areas. The percentage increase in areas with deregulation was 33.21 during that period; the percentage increase in areas without deregulation was 43.88."

TCAP said, "Texas continues to fare well in comparison to other states with deregulated retail electric markets. Average prices for deregulated electricity in Texas have increased at the third lowest rate among 15 states with deregulation and the fourth lowest rate among states overall."

"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," said TCAP executive director Jay Doegey

However, TCAP said that, "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."

Specifically, TCAP referenced PUC pricing surveys of residential rates at Austin Energy and CPS Energy for March 2019, which reported rates of 10.17¢ and 10.47¢, respectively. TCAP said that no REP offers beat these prices for the Houston area, and only a few REP offers beat these prices in the Dallas area

"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 said

TCAP's long-term analysis uses EIA data, with 2017 being the most recent data. As noted, TCAP also cites more recent PUC reporting of average rates for certain municipalities, as well as a review of current REP offers

See TCAP's analysis here

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