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Texas is the largest electricity market in the country and incredibly ranks 11th in the world when it comes to consumption. For years the politicians in the Lone Star State had been be arguing about a solution to rising energy costs for homes and businesses. Then in 2002, the Texas Senate passed a law that called for electricity deregulation.
Texas is the largest electricity market in the country and incredibly ranks 11th in the world when it comes to consumption. For years the politicians in the Lone Star State had been be arguing about a solution to rising energy costs for homes and businesses. Then in 2002, the Texas Senate passed a law that called for electricity deregulation. The law allowed most power customers in Texas 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 providers at least once, while about 40% of residential customers in deregulated areas have switched. It was a crazy start, but one that most people felt needed to happen. Then all of the sudden several new companies surfaced, which led people to believe the prices would fall tremendously. The problem was it didn't work like most people believed. In fact, it completely went in the opposite direction raising prices over 40%. This occurred during a 3 year span between 2002 and 2004. This left consumers in the state feeling mistreated. However, proponents of deregulation tried to explain the situation as best they could. The answer revolved around electricity prices rising due to natural gas obstacles. During this time the natural gas industry had reached an all time high and reached increases of 60%. So they were trying to tell us that deregulation was actually saving customers money. 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%. Keep in mind, there are many experts out there attributing to this decline through the combination of the recession and the decline in natural gas costs. Eventually we expect the prices to keep falling the further into a recession we go. It's an up and down battle that will continue to be monitored throughout. However, for businesses owners it has become a huge help. Since many of them have to cut prices during these economic times, the lower electricity costs have kept their businesses afloat. Definitely an advantage for commercial companies anyways. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Author: Jerry Dyess has been in the Texas Electricity business for the past 7 years. He has published many articles on Business Electric rates. |