AUSTIN – Texas consumers in regions open to electric competition can purchase electricity at considerably lower prices than is routinely reported in national comparisons, according to new research released today by the Texas Public Policy Foundation.
“Most competitive prices are considerably lower than what is reported in the federal government’s data,” said Bill Peacock, Director of the Foundation’s Center for Economic Freedom. “In fact, the average competitive price is below the national average, and consumers who exercise their choice can easily find rates that are lower than in our neighboring states.”
The Foundation’s new report, “Prices, Reliability, and Consumer Choice in the Texas Electricity Market,” analyzed offers posted on the Public Utility Commission of Texas’ “Power to Choose” website. It found that the average offer by companies in competitive regions in December 2009 was 11.01 cents/kWh, while consumers could choose offers as low as 8.52 cents/kWh. However, the federal Energy Information Administration reported that Texas consumers paid an average of 12.26 cents per kilowatt-hour (kWh) in October 2009.
“Real prices have dropped since 2001, when Texas began its transition to a competitive retail electric market,” Peacock said. “After adjusting for inflation, Texans can purchase electricity today for as much as 30.5 percent less than they could eight years ago. This is a marked contrast to the surge in gasoline and natural gas prices.”
Peacock’s research also averaged the 15 lowest offers (out of more than 100 available to Texas consumers) on the “Power to Choose” website. The average of 9.27 cents per kWh is 29.4 percent lower than the national average, and far lower than rates in states like New York (19.17) and California (14.08).
“Perhaps the significantly lower price of electricity in Texas is one reason we have recently moved past New York and California as the home to the most Fortune 500 companies,” he wrote.
The report also highlighted the positive effects of Texas’ electric restructuring on service reliability and market competition. It warned against interference by the Texas Legislature and local governments that would increase electricity prices through new fees and subsidies, particularly for renewable energy and energy efficiency.
“Markets don’t guarantee the lowest possible prices, but they do guarantee the best possible prices based on a customer’s preference,” Peacock said. “Customers often prefer reliability, customer service, lack of volatility, and brands over the lowest possible price. Yet today, it appears that Texas consumers are getting all of those things and low prices as well.”
Bill Peacock is Vice President of Research and Director of the Center for Economic Freedom at the Texas Public Policy Foundation.
The Texas Public Policy Foundation is a non-profit, non-partisan, free-market research institute based in Austin.
Primary website: www.TexasPolicy.com Facebook page: www.Facebook.com/TexasPublicPolicyFoundation Twitter feed: www.Twitter.com/TPPF
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