Texas Electricity Rates Skyrocket

February 10, 2009

AUSTIN – Electricity rates in Texas have soared well above the national average under a 10-year-old deregulation law, according to a study by a coalition of cities.

“As this report illustrates, consumers have paid too much for too long under deregulation,” said Jay Doegey, chairman of the Cities Aggregation Power Project, a non-profit coalition of 103 municipalities.

An industry group immediately challenged the findings, saying the report was based on “flawed reasoning” that resulted in erroneous conclusions.

“The simple fact is that in most parts of the state, there are lower competitive prices today than when prices were regulated,” said the Association of Electric Companies of Texas. “The Texas competitive market is working, even if CAPP thinks otherwise.”

The conflicting viewpoints point to a contentious battle in the 2009 Legislature over electricity rates. Several lawmakers say they plan to pursue legislation to protect consumers from rising costs on a number of fronts, including insurance and utility rates.

The CAPP report examined the impact of Senate Bill 7, which was passed by the Legislature in 1999 in what its sponsors said was an attempt to rein in rising electricity rates.

Our Perspective:

The deregulated utility market was set up to make utility costs more competitive. So far, it seems not to have worked. Prices have increased instead of becoming more competitive. Supply prices have tripled in the last 8 years.

As electric supply cost continue to increase, so does the demand for electricity and this is going to create another problem. It is projected that the demand for electricity is growing about 11/2% a year. In the next 8 – 10 years, we will not be able to support this growth in demand with the existing facilities we have.

What are our options?

Some are saying rolling brownouts! That doesn’t sound like a solution.

What are we going to do about this problem?

The real answer, reduce the demand off the grid and rebuild the existing electric infrastructure and start investing in alternative energy.

Let us know your thoughts? You may leave a comment or email george@hbsadvantage.com

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