By Alice Williams
Ever since 2002, most areas in the Lone Star State have had deregulated energy markets, meaning that electricity isn’t regulated by municipalities. Unlike residents of most states, consumers in Texas have the power to choose which retail electric provider (REP) they wanted to supply their electricity.
Prior to 2002, cities were responsible for regulating electric utility services, and rates were tied to the cost of fuel, allowing utilities to monopolize the market. Energy deregulation changed that trend, creating a financially competitive energy market in a state that consumes more energy per capita than most. Deregulation affected more than just rates, though—it has also spurred impressive developments in the field of renewables.
The Effects of Deregulation
The Texas energy market has a lot of benefits for consumers, but perhaps the biggest is that it gives them a choice. Between 2002 and 2009, it’s estimated that 86% of customers made a switch between companies or at least switched plans within their existing company. Instead of being forced to use one certain provider or one certain plan, consumers in Texas have dozens of price plans to choose from.
That wealth of options has forced electricity companies to work harder to win customers. They have to keep prices competitive and sincerely listen to consumer feedback—if they don’t, there are plenty of other REPs ready and willing to step in.
Deregulation and the Development of Renewable Resources
Deregulating the energy market has also been a huge factor in motivating energy companies to develop newer and more affordable forms of energy. In many cases, the big reason behind this exploration is for the economic benefits, but the result is positive for the environment as well. In fact, while the Lone Star State leads the country in the emission of greenhouse gases, it also leads the United States in wind power production. Texas produces more electricity from wind power than from its two nuclear power plants, and the state has the capacity to create more than 21,000 megawatts of power from wind turbines. And plenty of consumers are eager to take advantage of that impressive capacity.
In 2015, the city of Georgetown, Texas, became the first city in the state to move toward 100% renewable energy—because renewables were that much cheaper. Georgetown signed a 20-year deal with EDF for wind power in 2014, and SunEdison plants in western Texas will provide solar power to the city until 2041.
While many associate western Texas with oil, its wide expanses of sunny and gusty land make it the perfect place for wind and solar power too, so there’s a good chance other cities may follow Georgetown’s lead in the future.
Can the Power Grid Handle the Competitiveness?
The movement toward sustainable energy isn’t all smooth sailing, though. The competitive energy costs and renewables boom have pushed some of the state’s major coal energy providers to close down, and that loss from the traditional energy grid has been so extreme that the Electric Reliability Council of Texas (ERCOT), a nonprofit that manages Texas’s power grid, is concerned about the grid not having enough power to support demands.
So while progress away from emission-heavy fuels like coal is great for the environment, it could cause some logistical issues for state residents until renewables can sufficiently make up for the loss. There’s also a lack of state-wide renewable energy incentives, like net metering—though some companies are so committed to sustainable development that they’ve made their own incentives.
Technical difficulties aside, most signs point towards deregulation continuing to be successful in Texas. The benefits—both financial and environmental—have thus far been worth the bumps in the road.
Alice Williams is a communications professional with an MA in Communication Studies. In her spare time, she freelances and blogs about health and wellness over at www.honestlyfitness.com.