Texas electric companies are continuing to lower their rates because of the competition in place in most of the state, which pits energy providers against each other to win customers' business.

 

It's a scenario not seen in many other states, where despite sharp drops in natural gas and wholesale energy prices, retail customer rates are flat, or even increasing, because there is no competition forcing electric companies to reduce prices.  Take for example Maryland, which recently conducted an auction to purchase power for utility customers who don't choose an alternate supplier.  Although prices in the auction were lower, residential customers won't see lower rates until October, because state regulations say the low cost must be "blended" with higher-cost power bought from several years ago, under Maryland's regulated supply system.  In fact, rates will actually go up starting in June despite currently low wholesale pries, with bills expected to rise $16 for the year starting June 1.

 

Thus, regulation of rates is actually increasing prices for utility customers, but fortunately Maryland customers do have the option to switch to a company other than the utility, whose prices are lower.

 

Compare that with Texas, where competition among energy providers means customers receive lower prices immediately when the cost of electricity falls.

 

The latest energy provider to announce its intention to lower rates is Reliant Energy.  Its new owner, NRG Energy, said it expects to lower prices immediately upon closing its purchase of Reliant on May 1, just in time to bring customers lower rates for the summer.  Since Reliant is the second-largest electric provider in Texas, its price cut will likely trigger rate cuts among its competitors so that they don't lose business -- similar to airfare price wars in which consumers receive lower ticket prices as airlines try to undercut each other.

 

CPL Retail Energy, another one of the state's biggest electric companies, also said recently it is dropping rates for many of its customers starting May 5.   The price cut of 6 percent follows a 15 percent price cut that took effect at the end of February.  The resulting average annualized savings will be approximately $480 per household.

 

Prices for green energy have also fallen.  Though the promotion just ended in April, Bounce Energy had been offering its 100% renewable plan at the same low rate as its lowest priced non-renewable product, in celebration of Earth Day.  It was also enticing customers to enroll by offering a $50 Home Depot Gift Certificate along with other incentives.

 

Such price cuts, and value-added bonuses, are only available in Texas because customer choice makes energy suppliers compete for customers' business.  When customers can vote with their feet and shop for a better electric company, they save money.