WSJ: Texas' energy deregulation has been a terrible deal for Texas consumers
When Texas deregulated its electricity market two decades ago, proponents promised that consumers would get better service at lower prices. Long before the service half of that equation proved spectacularly wrong during last week's freeze, the 60 percent of Texans who had to buy their electricity from utility companies rather than local utilities were getting a crappy deal, the Wall Street Journal reports .
"These deregulated private consumers in Texas have paid $ 28 billion more for their electricity since 2004 than they would have paid at the rates billed to customers of the state's traditional utilities," the Journal noted based on its analysis of the Federal Energy Information Administration data. "From 2004 to 2019, the annual electricity rate of traditional Texas utilities averaged 8 percent below the statewide average, while the rate of retailers averaged 13 percent above the statewide rate."
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The theory behind deregulating the electricity market was that forcing electricity retailers to compete for customers would lead to innovation and lower prices. "In other countries where retail competition for electricity is possible, customers have the option to get their electricity from a regulated utility," the Journal said. Much of Texas doesn't have an established utility to compete with, and the retail industry has consolidated under two major retailers, Vistra and NRG Energy, who now control at least 75 percent of the retail market.
On the power generation side, deregulation in Texas has rewarded companies that can sell cheap electricity to retailers and utilities - or sometimes really expensive electricity - but it offers little incentive and no requirements to invest in infrastructure to cope with widespread blackouts last week. "Republican Governor Greg Abbott wants to force the power plants to hibernate," reports The Associated Press, and GOP-led Texan legislation will begin in hearings Thursday to beat up the state's network operators.
"In many ways we are victims of our own attempts to make free market forces work," MP Drew Darby (R) told AP. "Usually Texas law urges over-regulation," but "my take on something fundamental to human survival and needs is that we need reliable energy and water." MEP Rafael Anchia (D) agreed that "regulation in this building sometimes consists of four letters" but said: "Four million people without electricity and 12 million people without drinking water, right, that gets everyone's attention."
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