Texas Electricity Market Behavior is Changing

Posted on Posted in PUC/ERCOT, Texas Electricity News, TXU Energy

I ran across a fantastic article this week in the Ft. Worth Star Telegram. It’s one of the most interesting article’s I’ve read in awhile, in part because it touches on an item of market behavior (of the Texas Electricity market) that I’m curious about, and have been expecting to change for some time. Curiously enough, the article is based on a lot of facts from the CEO of Energy Future Holdings, the parent company of TXU Energy. But, I digress.

Now, what the article talks about is how, after 10 years of deregulated electricity, people are finally eschewing the big name brands in the market (Reliant and TXU) in favor of smaller REP’s that can get them the best prices. So, in short, Texans are starting to understand exactly how a competitive market for electricity service truly works, and better yet, are taking advantage of it properly. Now, there’s actually a lot of really good information in this article, more than I really have the time to get into depth here, but there’s lots of interesting nuggets here, such as how TXU lost 19,000 customers in the QUARTER that ended on June 30th. That’s 1% of their entire customer base. Another interesting piece of information in there is how ONCOR suggested a 250 million dollar rate hike, but administrative judges suggested only 30 million dollars. So what does this all mean, especially to the customer?

In short: It means that deregulation, which has been much maligned, is actually working. Customers are finally really shopping around for the best deals on electric costs, and not just sticking by unquestioningly with their big incumbent provider and the name they know. Even though the article mentions that TXU has a HUGE debt on the books that will be $23 billion by 2014, TXU can’t just raise prices to cover their note. The presence of competition forces them to keep competitive pricing at risk of losing most of their customer base…so the checks and balances of deregulation work. 10 years ago, TXU would have just raised the prices and no one would have been able to do anything. On top of that, they’d have still been the same as Oncor energy, so that 250 million (as opposed to 30 million) rate increase also would have gone through without any questions asked. But because Texans have energy choice TXU is forced to keep their prices low. And the number of customers they lost last quarter, a number which was unprecedented, proves the fact that TXU can’t afford to do anything but keep their rates competitive. The deregulated electricity market working for you, Texans, keeping your rates protected.

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