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Report: Deregulated areas still have higher average electric bills

Residents in deregulated areas of Texas paid more for electricity in 2014 than residents with regulated utilities, according to a new report.
Residents in deregulated areas of Texas paid more for electricity in 2014 than residents with regulated utilities, according to a new report. handout

Texans who shopped for electricity in 2014 paid more on average than folks who had only one power option, but the difference was smaller than before.

And statewide, homeowners in deregulated areas including North Texas paid more than the national average for power, although statewide power prices for all classes, including commercial and industrial customers, were below the national average.

That’s according to a new study that offers a panoramic view of electricity prices in the years since Texas deregulated the power market across most of the state.

In its report released Wednesday, the Texas Coalition for Affordable Power, which advocates for cities and other local governments and negotiates their power contracts, analyzed U.S. Energy Information Administration data on residential prices stretching back to 2002, the first year most Texans were allowed to choose their electricity provider under deregulation.

The study showed that residential prices in deregulated markets — which cover about 85 percent of Texas — averaged 15.5 percent higher than those in regulated areas, where consumers cannot choose their providers.

But that gap has been shrinking since 2011, suggesting that Texans are gradually getting more comfortable shopping for power.

Texans who take the time to sort through the options in the deregulated market are increasingly finding better deals — many of which beat prices from regulated providers. Such deals “appear to be more numerous than in previous years,” the report said.

“Folks living in areas of Texas with electric deregulation have paid more for electricity, on average, than Texans living without deregulation — that’s just a historical fact,” Jay Doegey, executive director of the coalition, said in a statement. “But it’s also true that the deregulated market is maturing.”

Why the discrepancy between regulated and deregulated areas? The coalition and other consumer groups suggest that continued inefficiencies, customer confusion and relatively high prices from legacy electric providers could be to blame.

Some industry officials suggest that comparing prices in deregulated and regulated areas of Texas is problematic.

“Each electric service area has a host of factors that affect the price of electricity, making it nearly impossible to compare the input costs to determine retail electric costs, or what retail prices might have been,” Julia Rathgeber, president and CEO of the Association of Electric Companies of Texas, said in a statement.

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