Study: Electric Market Reforms ‘Delivered What Was Intended’

Still, the findings don’t mean there’s a consensus on whether competition is good for consumers.

By Travis BubenikJune 13, 2017 7:05 am, , , ,

From Houston Public Media:

“Deregulating” the Texas electricity market “delivered what was intended.”

That’s the takeaway from a new study of the price you pay for electricity, but the findings don’t mean there’s a consensus on whether competition is good for consumers.

Here’s the big question: do you get a better deal if you can choose who you buy electricity from, or is it better if you have no choice, and have to buy from one city-owned utility company?

New research from Rice University shows that since reforms aimed at expanding consumer choice went into effect 15 years ago, they have made progress toward lowering prices.

“As we rolled through 2016, you actually saw that rates in competitive areas had moved to a point of parity with rates in non-competitive areas,” says Ken Medlock, one of the study’s authors. 

Still, the consumer advocacy group Texas Coalition for Affordable Power has repeatedly documented more expensive electricity in places like Houston, where there are a lot of options.

“The findings here are a bit rosier than our findings over the years,” says R.A. Dyer, a policy analyst with the group.

Medlock, with Rice University, says it’s true that competitive markets have been more expensive on average since deregulation, but he says that’s because reforms took a while to have an impact.

“Prices were adjusting over time to reflect the introduction of competition in the area where you lived, whereas maybe it wasn’t introduced in an area where your friend lived,” he says. 

Medlock says cheap natural gas prices have helped lower electric costs in areas with multiple providers, but natural gas hasn’t had much of an impact in places with one city-owned provider.