Lower Business Costs With Low Texas Energy Winter Prices

Before you can truly understand the electric deregulation issues in Texas, its important know that the state is ranked 11th in the world when it comes to its consumption. There has always been a debate between state politicians as to what the best approach would be to the rising energy costs. The only thing they could come up with was an energy deregulation law.

The law allowed most power customers in Texas the power to choose their own electricity service provider from a number of REPs or Retail Electric Providers in their area. Initially, the new law was extremely popular and customers couldn’t wait to take advantage of better plans that would offer them lower rates. The numbers are actually quite astounding. From 2002, more than 85% of commercial customers in Texas have switched their energy providers at least once, while about 40% of residential customers in deregulated areas have switched.

The early evidence was auspicious as a number of new firms entered the market. It appeared as if the increased competition from energy deregulation would lower prices. In the two years after deregulation, more than 60 start-up firms entered the Texas power market. These new firms served both residential and commercial areas.

However, shortly after deregulation was embraced by customers, Texas energy prices steadily began to rise. According to one source, the average customer’s electricity bill rose by over 40% from 2002 to 2004. This left many Texans feeling cheated and there was a new campaign to repeal deregulation.

Due to all the dismay, proponents of energy deregulation tried to explain the situation as best they can. The first answer revolved around natural gas. After all, during the same time these prices increased by nearly 60%. The way they figured it was that it was still going to save Texans money in the long run.

The biggest issue that they tried to confront head-on was the misconception of immediate savings due to the vast amount of competition. While this was going on, there were several individuals still remaining skeptical about the situation. It was almost as if they were being sold a false bill by politicians and legislators.

What it came down to is the economists and supporters of deregulation were right. Once we were able to stabilize the natural gas arena, electricity bills in Texas eventually started falling. By the summer of 2008 through the winter of 2009, these prices decreased by 30%.

Unfortunately the debate continues, and others are expressing their concerns about these benefits only happening because of the recession mixed in with the current natural gas costs. The truth is, the further into the recession we go, the lower the electric prices will go.

These falling power prices have been a great boon to businesses in Texas who have been forced to cut prices and tighten their in the midst of the worsening recession. In fact, many small business owners claim that lower electricity costs are at least partially responsible for helping them keep afloat.

About the author: Jerry Dyess has been in the Texas Energy business for many years. He has published many articles on Texas Power prices.