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Texas Electricity Rate Soared After Deregulation Essay

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Updated: Dec 1st, 2021

Introduction

Short supplies of energy are the most burning issues of the modern world. Despite the fact that under the current economic crisis the world prices for such energy resources as the natural gas and oil fall, the overall situation is rather critical – the world’s deposits of these fuels are being utilized and the less fuel resources remain, the higher their prices are. Texas is the American state that has felt this price changes more than any other state. Certain independent agencies, newspapers and analysts attribute the sharp increase of electricity rates in Texas to the deregulation policies. Accordingly, the effects of these policies upon the Texas electricity rates are the subjects of this paper.

Main body

To start with, deregulation policies were implemented in 2002 by the 1999 Senate Bill 7. The essence of these policies lied in the reduction of the state regulation of retail electricity markets in Texas to reduce the prices that monopolist companies could increase under the state regulation (Credo Energy, 2009). The author of the deregulation laws, the former Senator David Sibley states that currently his laws work, and the today’s prices for electricity are results of the world gas and oil prices (Root, 2009). However, it is evident from the data of the Cities Aggregation Power Project that the Texan consumers, whether they are ordinary citizens or business corporations, pay the rates that are higher than in any other state dependant on the natural electricity resources as much as Texas (Souder, 2009).

Thus, according to the data by the Cities Aggregation Power Project, in 2007 Texans paid 10.3 cents per kilowatt-hour, while the citizens of Louisiana or Oklahoma paid 8.3 and 7.3 cents respectively (Root, 2009). Such increase of electricity rates is connected by the experts with the failure of the deregulation policies’ aims – instead of lowering prices for electricity they allowed the retail suppliers to establish the prices they consider to be reasonable for a period. As a result, the Texan consumers pay the prices that grew 64% since the moment when the deregulation laws were adopted in 1999 (Root, 2009).

Despite all this, the state agencies, political lobbyists and energy providers still claim that the deregulation plan is working (Montgomery, 2009). To exemplify this, one of the electricity providers, Credo Energy, claims that the consumers using the energy under deregulation policies can receive it at lower prices, with higher quality of production and customer support services. Moreover, such advantages as the opportunity to receive energy from the same providers but through the uniform Transmission Distribution Service Provider (TDSP), the stable quality and power of the electricity supply are listed among the positive results of deregulation (Credo Energy, 2009).

Conclusion

However, these claims can be viewed as the lobbying of the interests of the monopolist energy suppliers in the US market. For example, David Sibley is nowadays known as the lobbyist of the energy industry interests (Souder, 2009). Moreover, the above mentioned TDSP is a bright example of the monopolist in the energy supply market. All these factors contradict to the public opinion towards deregulation and allow making an assumption that the policies considered were initially planned to support energy monopolists. The ordinary consumers do not see the actual reduction of prices and express their negative attitude towards deregulation and its results. Independent agencies also report negative deregulation effects and plan on activities to force the legislative abolition of deregulation or its substitution by the competitive market policies (Souder, 2009).

Works Cited

Credo Energy. “Deregulation.” 2009. Credoenergy.com. Web.

Montgomery, Dave. “Texas electricity rates skyrocketed after dereg.” Star – Telegram. 2009. Star-telegram.com. Web.

Root, Jay. “Report: Texas electricity rate soared after deregulation.” The Austin American Statesman. 2009. ASSOCIATED PRESS. Web.

Souder, Elizabeth. “Report: Texas electricity rates have soared since deregulation” The Dallas Morning News. 2009. Dallasnews.com. Web.

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IvyPanda. 2021. "Texas Electricity Rate Soared After Deregulation." December 1, 2021. https://ivypanda.com/essays/texas-electricity-rate-soared-after-deregulation/.

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IvyPanda. (2021) 'Texas Electricity Rate Soared After Deregulation'. 1 December.

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