Electric competition in Texas is producing lower prices and saving Texans money versus the old monopoly system, a new review of energy prices shows.

 

With over 30 electric companies now competing to win customers' business in most parts of Texas, including Dallas (the Oncor area), Houston (CenterPoint) and Corpus Christi (AEP Texas Central), electricity rates have been pushed lower than the last regulated rates of December 2001, from right before competition started.  It's no surprise, as electricity companies now have to compete to survive and grow, which means better offers and products for customers. 

 

On an inflation-adjusted basis, rates are lower in every service area under competition, whether using for comparison a month-to-month offer, or a 12-month fixed-price offer that not only provides savings versus the old regulated rate, but also protects customers against price increases.

 

In fact, today's rates under competition are typically 20% to nearly 30% lower than the last regulated rates of 2001, when adjusting for inflation using the Consumer Price Index.  A breakdown of savings, both for month-to-month plans and fixed plans, is below, using offers from Retail Electric Providers (REPs) from last week.

 

Month-to-Month REP Offers as of March 9, 2009:

Service                      Lowest                    12/01 Regulated                      %

Area                          REP Offer                Rate                                       Difference

Oncor                          9.3¢                      11.8¢                                     -21.2%

CenterPoint                  9.9¢                      12.6¢                                     -21.4%

TNMP                           9.1¢                      12.9¢                                     -29.5%

AEP TNC                      8.9¢                      12.2¢                                     -27.0%

AEP TCC                    10.0¢                      11.7¢                                     -14.5%

 

One-Year REP Contracts as of March 9, 2009:

Service                      Lowest                    12/01 Regulated                      %

Area                          REP Offer                Rate                                       Difference

Oncor                        10.6¢                      11.8¢                                     -10.2%

CenterPoint                11.3¢                      12.6¢                                     -10.3%

TNMP                         10.1¢                      12.9¢                                     -21.7%

AEP TNC                    10.0¢                      12.2¢                                     -16.4%

AEP TCC                    10.9¢                      11.7¢                                      -6.8%

 

Even when not adjusting for inflation, the lowest prices available today under competition are still lower in four of the five service areas.  These lower prices show the power of competition to keep prices down, because the inputs to generate electricity have risen astronomically since 2001.  For example, natural gas prices have risen 72% over that time, western coal prices have doubled, and copper prices have risen 114%.  Despite these increases, energy providers are offering customers lower rates than eight years ago, because competition forces them to, in order to win customers' business.

 

Lowest REP Offers as of March 9, 2009:

Service                      Lowest                    12/01 Regulated                            %

Area                          REP Offer                Rate (No Inflation)                         Difference

Oncor                         9.3¢                         9.7¢                                             -4.1%

CenterPoint                 9.9¢                       10.4¢                                             -4.8%

TNMP                          9.1¢                       10.6¢                                           -14.2%

AEP TNC                     8.9¢                       10.0¢                                           -11.0%

AEP TCC                   10.0¢                         9.6¢                                            +4.2%

 

Even in AEP Texas Central, where rates have increased marginally, competition has kept prices down from where rates would be under the old system, under which the full weight of fuel costs and other raw material increases were passed onto customers.  Instead of feeling the full effect of a 72% increase in natural gas prices, customers at AEP Texas Central only see a modest 4% increase, which, as noted above, is actually less than the rate of inflation, so prices today, in real terms, are actually lower than 2001 levels.