Texas Electric Choice

Texas is the most popular area in the US where electric choice is available. The choice program was first popularized by none other then Enron Energy with a lot of lobbying dollars spent in Austin. You could say that there was political corruption because of this connection to the now deregulated electric utility market in Texas but in reality there are lobbyists on either side of the argument fighting for either cause at all times. In reality electric rates, retail electric providers, wholesale markets, and the grid system have had amazing increases in efficiency because of deregulation and we have seen cost savings because of it. Even with increased efficiencies in the overall retail system there is still constant added demand for energy in Texas and so as a part of the success of deregulation citizens and politicians must always look for ways to assist in building out the energy generation part of the grid to keep prices down.

In the year 2011 the EPA federal government agency has created laws that will require Texas to close down several very old coal fired power plants to meet federal clean air act regulations. Coal energy generation remains one of the cheapest forms of electricity creation in the state. Texas has not been given the ability to have time to adjust to these new regulations by creating new cleaner coal plants or retrofitting existing ones. Energy Future Holdings even attempted to create several new coal fired power plants in Texas using clean technology but the liberal political voice knocked this project down. This issue will likely cause Texas electric rates to go up in price as we have to rely more heavily on the more volatile generation fuel of natural gas.

When energy prices start going up again don’t blame it on TXU, Governor Perry and the conservatives of the state as this could have all been handled by allowing Texas to build cleaner generation facilities as planned. Prior to deregulation before 2002 it just so happened that Enron had the most to gain at the time by participating in lobbying for Texas electricity deregulation. The Enron connection provides for some conspiracy fodder now that Enron has collapsed and brought down many companies and people with it. Fortunately even though a tarnished brand like Enron was initially connected with the popularisation of the deregulation idea Texas electric deregulation has gone on to be a great success. The opinion that Texas energy deregulation is a success is hotly debated even still. For example the mayor of Houston, Bill White was first a proponent and advocate for Texas electric choice only to later turn against the idea when energy prices spiked.

As of today energy prices are at normal tolerable levels in Texas as the price of electricity is directly tied to natural gas. Natural gas prices at the time the Houston mayor turned against Texas electric competition had gone up to $12 mmbtu but as of today natural gas prices are trading around $4 mmbtu. An average Texas electric rate for a residential home with all fees and charges included is right around 9.8 cents per kilowatt hour. When Bill White turned on the idea prices had increased to over 14 cents per kilowatt hour and higher. Many people blamed some form of wholesale price manipulation for the terrible prices. In reality the natural gas and retail electricity wholesale market is strictly regulated and violators are fined tens of millions of dollars for anything resembling a manipulation of the market.

In summary, Texas for the most part operates an independent electric grid that is not tied to other states. The grid is managed by a private independent organization by the name of ERCOT. This organization has had plenty of problems in its past but at the same time must maintain a transparency and openness to regulators which is why when anything bad has happened people have been prosecuted. At this time ERCOT has maintained a stellar record of managing the grid and is currently working on implementing many changes to create a smarter more efficient pole and wire and overall grid system. With new advanced smart meters installed in almost every home and business in both Centerpoint and Oncor electric utility areas the system is starting to come together to meet modern day technology. The main challenges facing the state of Texas in regards to electricity prices is working within heavy handed federal regulations coming from the EPA and not so much a lack of healthy market competition.