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Facts show electric competition works in Texas

By: John W. Fainter |

The Chronicle’s editorial of Jan. 20, “Not so shocking,” charges that “electric deregulation isn’t working in Texas,” that consumers have not benefited from lower prices from the deregulated – or “competitive” – market as promised. But a close look at the numbers shows consumers actually are doing very well.

The fact is that Texas electric consumers in competitive areas who are willing to shop among retail providers are paying prices well below the regulated prices from a decade ago when consumers were still paying retail rates set by the state. The comparison is even starker if you factor in inflation.

Here are some numbers for those who buy electricity in CenterPoint Energy’s service area: Last year it was common to find a one-year fixed price offer for electricity from a retail provider at 9 cents per kilowatt hour; variable price offers were as low as 5.2 cents per kilowatt hour.

Do you think consumers were better off in 2001, before the competitive market? Well, the regulated price per kilowatt hour in CenterPoint’s service area was 10.4 cents then. Factoring in inflation, the equivalent today would be 13.6 cents. Essentially, consumers today can buy electricity on a fixed-term contract for 44 percent less than the prices of 2001. Since 2001, has your cable bill gone down? Your phone bill? How about groceries? Taxes?

The fact is that retail electric prices in Texas have dropped steadily over the past few years even as the prices of other commodities, such as gasoline, crude oil and coal, have risen. While natural gas prices are currently low relative to recent years, the low electric prices in Texas’ competitive market are not just the result of falling natural gas prices. Prices are low in Texas’ competitive market even though the Henry Hub spot price for natural gas is about 40 percent higher in January 2013 than it was in December 2001.

The Chronicle editorial claimed that municipally owned utilities in Austin and San Antonio have lower rates. Yet there are offers in competitive areas of the state that are lower than what Austin Energy and CPS customers in San Antonio pay. This is despite the fact that these municipally owned utilities avoid many of the costs that the competitive suppliers face. Additionally, numerous municipal utilities are currently implementing rate increases.