Playing The Deregulated Field

Posted on Posted in TER News

Something I have noticed over the years in regards to the deregulated Texas electricity market is that most people seem to have a hesitancy about switching providers. Now, there are lots of reasons this might be the case. Some of it might be loyalty to incumbent providers like Reliant and TXU who they’ve known for decades. Other people just might not understand exactly how the market works, or they don’t want to deal with the hassle of regularly checking the market pricing to see if their current deals are competitive. Heck, some people might not even know the market is deregulated. Whatever the reason, lots of people in Texas do not shop for electricity with the same diligence and research that are standard when buying a piece of electronics, pricing cable or cell phone plans, or even the way they casually check pump prices at gas stations.

I was checking out the JD Power Website and came across a press release some interesting numbers in regards to deregulated natural gas in Georgia. Like the Texas electricity market, natural gas in Georgia is deregulated and customers can shop between a number of providers and seelct the one that suits them best. The survey into the satisfaction of natural gas studies shows that 15% of the 1.5 million Georgians in deregulated areas have switched their providers in the past year. Additionally, 15% of the people surveyed indicated that they planned on switching providers within the next 12 months.

It’s not unreasonable to assume that many of the people who have switched within the year and are planning to switching within the next 12 months are active within the deregulated gas market in Georgia. So lets assume that conservatively that 20% of the Georgia market is playing the deregulated gas field for the best prices and best service. I’m not certain what the numbers are for the percentage of Texans in the deregulated market, but if we estimate the number of potential deregulated customers at 18 million, I’m not sure that 20% of the Texas market are regularly shopping for electricity in Texas. If that’s the case, why not? In Georgia, only 1 in 5 people seem to be shopping regularly for gas, and you would think the question there would be why aren’t more people actively working the market to their advantage? And if my assumptions are true, not even 1 in 5 Texans are leveraging the market to their advantage. In an environment where we will all pass up gas stations for a cent lower, cut coupons to go to the grocery store, or wait in lines starting at 3 am to stampede stores for Black Friday sales, I find it baffling that most people won’t even bother exploring the Texas electricity market to make sure they’re getting the best deals.

3 thoughts on “Playing The Deregulated Field

  1. I think one of the problems is that many consumers are either not aware that the market is privatized or don’t even understand basic terminology (Example: my mom thought that “renewable energy” referred to whether you can renew the contract !!) My brother says he uses Reliant because they are the “most reliable.”

    Another very confusing thing is fixed rates vs. variable rate. Most people want the predictability of a fixed rate, but they forget to do another price check when the contract has ended (and often that will work to the consumer’s disadvantage). With variable rate, sometimes the terms don’t allow you to take advantage of the advertised variable rate. Finally, the bills are confusing. Dynawatt quoted me a very good price for 100% green, but none of the bills actually specified the rate…and what did appear seemed to indicate a lot higher price. I called several times to get clarification (I initially though they were charging me the wrong amount). A bill should just state this:

    1. Price per kilowatt
    2. Expiration of this price.
    3. Total kilowatts.
    4. Total amount charged by TDU.

    Maybe power providers should be obligated to notify you when you go off the contract or require that you actually sign up again… I think consumers are just too busy to keep track of these things …all to the power company’s benefit.

  2. One more thing. I just discovered that my sister’s choice of providers depend on the amount of the deposit. But providers really don’t state upfront what this amount will be, and often this amount has nothing to do with credit history or your history of making payments. I have had flawless history of paying energy bills, but when I changed providers to Tara recently, I was socked with a $200 deposit. They didn’t even state anywhere how the deposit would be returned to me. After emailing customer support, I received this reply: ” the deposit is either adjusted in the final bill or should you renew your contract and have paid 12 months consecutively on time then you will receive a letter saying that your deposit will be credited in the following statement accordingly.”

  3. Deposit amounts are different for everyone, Robert. It relates directly to a customer’s credit score. So there’s never straightforward answer to what a despot will be.

    You’re wrong. It has everything to do with credit. However, it can also (along with credit) depend on estimated usage of a month’s worth of electricity. Ive heard of some people with excellent credit paying an 800 deposit just because they had a huge home. It was 2.5 months of estimated electricity usage. But make no mistake, the primary driving factor is credit. It gets more confusing when you also take into account each company has different deposit policies. Someone with a 600 credit score might have to pay a 350 deposit at one provider, but it could be 600 at another provider.

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