The deregulated Texas electricity market, designed to provide reliable power at a lower price, left millions in the dark last week. For two decades, customers have paid more for electricity than state residents served by traditional utilities, according to a Wall Street Journal analysis.
Nearly 20 years ago, Texas switched from using fully regulated utilities to generate and deliver power to consumers. The state deregulated power generation, creating the system that failed last week. And it required nearly 60% of consumers to purchase their electricity from one of the many retail energy companies, rather than a local utility company.
Those deregulated Texas residential consumers were paying $ 28 billion more for their power since 2004 than they would have paid at the rates charged to the customers of the state’s traditional utilities, according to the Journal’s analysis of the data. federal Energy Information Administration.
Last week’s crisis was driven by energy producers. With power largely restored, attention has turned to retail electrical companies, a few of which plague consumers with high bills. Power prices have risen over several days during the crisis to the market price of $ 9,000 per megawatt hour, a hallmark of the state system designed to incentivize power plants to provide more juice. Some consumers who have opted for variable rate power management companies see the high bills.
This should not have happened under deregulation. Proponents of competition in electricity supply promised it would lower prices for consumers who could shop around for the best deals, as well as for cell phone services. The system would be an improvement over monopolistic utilities, which have little incentive to innovate and provide better service to customers, advocates of deregulation say.