Electrical Utility Deregulation Aftermath

How did electrical utility de-regulation fare in Texas? It depends who you ask. Consumers for whom de-regulation was intended to benefit were impacted  differently depending on their credit and payment history. Better credit ratings enabled the consumer to obtain the best rates, not unlike the financial markets. Under the regulated system your rates were determined by a tiered system of usage. All customers were charged the same according to usage, not by credit scores or payment history. Under electrical deregulation, some people paid more than others for the same electrical usage. This was especially true if the customer was dropped by their electrical provider and forced to find a “Provider Of Last Resort”. If the customer were forced to seek a Provider Of Last Resort, their electric rates would skyrocket to a level deemed unacceptable by most. These people were left with no choice but to pay inflated prices until they could find another provider that would take them as a customer.

How about cost savings to consumers? The percentage of the total electrical cost that could discounted by the electrical providers was only 1/3 of the bill.  Only 1/3 of the bill could be discounted because 2/3 of the total were “pass through” costs. Pass through costs are; the transmission costs from the electric generators to the substations, the distribution network costs (overhead & underground) from the substation, including storm damage and maintenance. Add to these costs meter connects/disconnects and meter reading. With only 1/3 of cost being able to be discounted and a profit still had to be made, the savings to consumers are not what may they may first seem. These apparently small savings benefit the largest power consumers because quite obviously a small savings multiplied by a huge volume will result in considerable savings. The reverse is true for most residential consumers, for the small consumption of  power with weak discounts result in little savings. The big winners – the larger power hungry consumers! The residential customers save a little, which in most cases is not worth the constant shopping around for the best deal.  The bottom line; the change to a deregulated electrically utility system fell far short of what voters expected.