Deregulation fail

How's that electricity deregulation working for you, Texas?

In the decade since Texas deregulated its retail electricity market, rates have skyrocketed higher than any other state with such open competition, according to a report released today.

Commissioned by the Cities Aggregation Power Project, a nonprofit coalition of Texas municipalities, the report found that residential electricity rates rose 64 percent between 1999 and 2007. Before that, Texans paid rates that were well below the national average, according to the U.S. Energy Information Administration.

Boy, the one time we're below the national average for something in a good way, we go and screw it up. If only we could bring such results to the number of uninsured children or something like that. In any event, since I'm a numbers kind of guy, if electric rate increases had been capped at five percent a year, which is what Governor Perry and some members of the Lege would like to do to property appraisals, the maximum total increase over an eight-year period would be a little less than 48%. For some odd reason, this issue just isn't as salient to them. Go figure.

The report does give the law credit for encouraging the use of renewables, enhancing efficiency standards and helping to reduce emissions.

The Cities Aggregation Power Project, which pools the energy needs of its member cities in order to negotiate better prices, does not recommend going back to the pre-deregulation system. But the group says it wants the Legislature to curb market abuses by limiting how much power any one utility can generate.

The coalition also advocates reforms that would allow citizens living in its municipalities to join together and negotiate better rates the way governments do now.

Here's CAPP's press release, and their full report (both PDF). The main takeaway from all this is that what we have is not a "free" market. There's too many abuses, and the consumer has little power to do anything about them. It also contains this blast-from-the-past gem:

Enron played a key role in the deregulation of the Texas electric market. Some of the current problems with the market structure can be attributed, at least indirectly, to the considerable political influence of Enron during the late 1990s.

They're just the gift that keeps on giving, aren't they? Remember, kids, what is good for business - in particular, what is good for one business - is not necessarily good for you. EoW has more.

Posted by Charles Kuffner on February 10, 2009 to The great state of Texas