Data shows that a significant number of Texans are not taking advantage of cost saving opportunities that can be obtained from shopping around for electricity in the competitive market. Donna Nelson, who chairs the state’s Public Utility Commission (PUC), has found herself defending electricity deregulation to critics who believe that deregulation does not result in lower prices. Except for San Antonio and Austin, the entire state of Texas is deregulated, meaning that households can shop around for their electricity supply.
In 2011, Nelson addressed an industry trade group and stated that “customers in Dallas-Fort Worth could choose from several different 12-month fixed-price offers at 8.4 cents per kWh”, for example.
The actual price of electricity charged to customers is mostly kept a secret, and may vary by customer depending on their contract. However, the government does have one method to measure average prices in the past. Annually, retail electricity providers send their price figures to the Energy Information Administration (EIA), which then publishes the each provider’s total number of customers and their average retail price of those customers’ electricity rates.
Most Texans purchase their electricity from major, long-standing electricity providers, such as TXU Energy and Reliant Energy. These two providers alone accounted for 3 million customers, or about one-third of all households in Texas. EIA data shows that the average price paid by customers in 2011 was 12 cents per kWh, or 50% more than the 8.4 cents per kWh that Nelson cited. Deregulation critics may be right that customers are not saving money, but this seems to be due to lack of education among consumers rather than deregulation itself.
Some customers simply don’t understand the process of shopping around for electricity, although it’s very simple. Others don’t realize that their contracts have expired, which often leads to higher variable rates.
If you live in Texas, we suggest that you locate your contract now, and mark your calendar for when it expires. You might even find cost savings opportunities if your contract hasn’t expired. While there may be penalty fees for switching providers, you may still be able to save by switching now if you’re paying high rates – if the saving from lower rates outweighs the penalty fee, that is.
Switching is fast and easy, and the cost savings is definitely worth your time.