Texas takes stock of deregulation after 10 years

Texas looks to be a major topic of conversation for electricity reformers this year, as 2012 marks the 10th anniversary of the implementation of electricity in the state.

GreentechMedia notes that Texas has been the most important competitive electricity market in the country over the past decade, being consistently rated as the most efficient open market. Many Texans have already seen the advantages of this policy through lower electricity rates, with more than half of all Texas residents switching electricity providers.

But GreentechMedia notes that the policy has had an equally important impact on the development of new electricity generating capacity, in particular renewable electricity sources.

"A disproportionate amount of the wind that has been built in the U.S. has been built in those places that have market structures," American Wind Energy Association transmission policy manager Michael Goggin told GreentechMedia. "Markets provide a uniform, fair-price signal for all of the energy resources."

When Texas implemented electricity deregulation, and when it last updated its policies, the state created a number of market tools that have been instrumental in incorporating wind into the state's grid. And the move has paid off, with wind power helping replace several coal and gas-fired plants that were forced to shut down in recent low temperatures.

StateImpact Texas reports that not everyone has been satisfied with the results of electricity deregulation in the state, however. A report commissioned by the Texas Coalition for Affordable Power notes the steadily rising electricity rates in Texas. Many people blame this on retail electricity providers as deadweight on the system, but others point out that Texas has seen unprecedented growth over the past decade.

"To give you an example, for like four years in a row leading up to the ’08 recession, the Dallas Fort-Worth area added the electrical equivalent of Little Rock, Arkansas every single year," Mark Bruce from Stratus Energy Group told StateImpact Texas.

Notably, while Texas electricity prices from alternative electricity providers skyrocketed compared to the U.S. average and the state's remaining monopolies over the first several years, the gap has narrowed in the five years since. Average electricity rates have continued to rise, according to the U.S. Energy Information Administration, but Texas has actually seen lower electricity prices as deregulation has allowed it to take advantage of low natural gas prices.

Ultimately, the state still faces some uncertainty in its market, but prospects for electricity deregulation in the state look stronger now than ever before.