Report Says With Deregulation, Electric Rates Have Gone Up

Seven years after electric deregulation took effect in Texas, a new report suggests instead of lowering energy costs, it’s actually helped drive prices up. Jack Williams has the story.


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It’s been ten years since the deregulation ball started to roll in Texas. Senate Bill 7 was signed into law in 1999 and loosened government regulation over the retail electric market. It allowed free-market competition among providers when it went into effect in January of 2002. The idea was to lower the cost of electricity. But according to a report by the non-profit Cities Aggregation Power Project, it’s done the exact opposite.

“The state of Texas, on average, was well below the national average for electric prices. Beginning with deregulation, that trend-line has flipped and consistently since 2002, Texas prices have been well-above the national average and the disparity has been growing.” 

Geoffrey Gay is general council to CAPP. He says since deregulation, electricity prices in Texas have gone up 64-percent, more than any other deregulated state. 

“This report was really to encourage the legislature to finally do something after, I think we had four prior sessions where the legislature could have made some tweaks, some changes to deregulation improve it to the benefit of consumers and that hasn’t happened. So this report was designed to take a long, ten year view of what’s been happening in the state, what led up to deregulation, and what’s happened since.”

Gay says CAPP doesn’t suggest deregulation be totally dismantled, only that lawmakers should eliminate harmful market abuses that cause prices to go up. He says lawmakers should also require more accountability from ERCOT, the agency that operates the state’s electric grid. The Public Utility Commission oversees ERCOT. The agency’s Terry Hadley says the PUC is simply a resource for lawmakers.

“We carry-out the laws they pass and over the next few months, we know there will be questions from lawmakers, there will be committee hearings which may include a lot of the information in these studies and they will ask us to provide the facts, the information of how things are working and try to flesh-out these studies as the legislative process evolves.”

Yesterday, a trade group, Texas Competitive Power Advocates, pointed out that rates have started to come down the last few months.

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