NCPA - National Center for Policy Analysis

Texas Electricity Deregulation Benefits Businesses

January 3, 2003

Although some Texas consumers experienced a rocky start following the first year of electricity deregulation in that state, many businesses cite examples of large savings.

State officials are quick to note the larger savings by businesses, which generally use more electricity than households, in explaining their faster adoption of electric competition.

  • For the average residential consumer, the savings amounted to $5 to $10 a month, compared with hundreds or even thousands of dollars for business customers.
  • About 9 percent of small-business customers have switched, while almost a third of large commercial and industrial customers have changed providers.
  • Overall, about 23 percent of the state's electricity load has been moved to a competing electric company from the incumbent utility.
  • The Public Utility Commission of Texas says about 80 percent of commercial and industrial customers have either switched companies or renegotiated their contracts with their existing providers.

Many electricity providers expected the weak economy would lead to a bonanza in switching toward low-cost competitors, but the bankruptcy filing by Enron Corp. last December scared away many residential consumers.

Source: Sudeep Reddy, "First Year of Competition Was Electric: Deregulation Generated Savings For Businesses, Shorted Out For Some," Dallas Morning News, December 31, 2002.

 

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