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Texas Coalition for Affordable Power Release Report on Electric Deregulation

Texas Coalition for Affordable Power’s (TCAP) report on electric deregulation in Texas says the industry has failed to deliver, while industry and agency critics find fault with the reports price and reliability comparisons.

Texans have paid higher prices for power that is less reliable – as evidenced by two rolling blackouts – during a decade of electric deregulation, the report, Deregulated Electricity in Texas: A History of Retail Competition – The First 10 Years,  asserts.

Commissioned by the Texas Coalition for Affordable Power, a non-profit including 163 municipalities and other political subdivisions, the report takes sharp aim at higher retail prices, increased consumer complaints and greater reliability problems.

Key findings of the report include:

  1. During 10 years of deregulation, typical electric customers paid $3,000 more than other Texans not subject to deregulation.
  2. Nationally, Texans paid average prices 6.4 percent below national averages before deregulation but 8.72 percent higher in the 10 years since deregulation.
  3. Customer complaints have risen because an increase in providers has also produced an increase in the complexity of contracts.
  4. Texaselectric reserve margins – which are key for electric reliability – have shifted from among the highest nationally before deregulation to among the lowest now.
  5. Under deregulation,Texashas seen two rolling blackouts in four years and nine reliability emergencies last year alone. Before deregulation,Texasendured only one rolling blackout in more than 30 years.
  6. Electric generators are seeking market changes “that abandon competitive principles” and rely upon “artificial price supports.” At the same time, generators are making no promises that they’ll add new electric supplies if they get their wish for market adjustments.
  7. The power grid, the Electric Reliability Council of Texas (ERCOT), has “suffered persistent management problems.”

The report acknowledges that electric prices have recently dropped but also notes that customers have endured $7 billion in “stranded costs” under deregulation that were shifted from electric generators to electric customers.

TCAP Board President Jay Dogey said recent drops in both prices and complaints are not “sufficient to offset the billions of dollars in excess costs to consumers. All this points to a market that is deregulated but still not fully competitive.”

John Fainter, president and chief executive officer of the Association of Electric Companies of Texas, said TCAP’s report fails to consider several key factors that undermine its comparisons, but that still cannot counter the fact that Texas has some of the highest electric bills in the country.

Texas Public Utility Commission Chairman Donna Nelson responded to the report’s price comparisons by re-issuing a letter she sent to Senate Business and Commerce Committee Chairman John Carona (R-Dallas) more than a year ago.

A copy of Nelson’s letter is here.

TCAP’s report is here.