Electrical Deregulation in Texas , approved by Texas Senate Bill 7 on January 1, 2002, calls for the establishment of the Electrical Utility Restructuring Legislative Supervisory Committee to oversee the implementation of the bill. By law, deregulation will be phased out in a few years.
As a result, 85% of Texas electricity consumers (served by companies not owned by municipalities or utility cooperatives) can choose their electrical services from various retail utilities (REP), including existing utilities. The utilities in the area still own and maintain a local power grid (and a company to contact if there is a power outage) and are not subject to deregulation. Customers served by city cooperatives or utilities can choose an alternate REP only if the utility has "opted in" to deregulation; to date, only the area served by Nueces Electric Cooperative has opted to participate.
Since 2002, about 85% of commercial and industrial consumers have switched electricity providers at least once. Approximately 40% of residential consumers in regulated areas have shifted from incumbent providers to competitive REP. REP provides services in the state include: AmeriPower, TriEagle Energy, Acacia Energy, Ambit Energy, Wind Energy, Clearview Energy, Green Energy Green, Consumer Energy, Energy Illumination, Power Now, Energy Japan, Entrust Energy, Energy Generated, Energy Champion, Energy Energy, Kinetic Energy, Energy Mega, APG & E, Energy Adjacent, Spark Energy, StarTex Power, Energy Flow, Tech Electricity, Texas Power, TXU Energy, XOOM Energy, and 4Change Energy.
Video Deregulation of the Texas electricity market
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Texas has electricity consumption of $ 24 billion per year, the highest among the US. Its annual consumption is comparable to England and Spain, and if the country is an independent nation, its electric market will be the 11th largest in the world. Texas produces the most wind power in the US, but also has the highest Carbon Dioxide emissions from any state. By 2012, tariffs on residential power in Texas are ranked 31st in the United States and the average monthly housing electricity bill in Texas is the fifth highest in the country.
Maps Deregulation of the Texas electricity market
System
The law sets the Texas Power Reliability Board (ERCOT) to be an authority to oversee the reliability and operation of the network thereby ensuring no buyer or seller will gain unfair advantage in the market.
"price to beat"
Included in SB7 is the idea of ​​"price to beat" or PTB, the idea of ​​a regulated level that governs the pricing behavior of the previous utility.
According to typical economic theory, prices are determined optimally in fair and transparent markets, and not by political or academic bodies. In the deregulation of the electric market, one immediate concern with pricing is that incumbent power suppliers will weaken the prices of newcomers, prevent competition and perpetuate the monopoly of existing providers. Thus, the SB7 bill introduces a phase-period where floor price will be established (for incumbent power companies) to prevent this predatory practice, allowing new market entrants to become established. New market entrants can charge below price to beat, but old players can not. This period will take place from 2002 to January 1, 2007. In 2007 investors of Texas-owned utility affiliates no longer have a price to beat the tariff.
How is the price to beat set?
To encourage entry into the market, the price to be defeated must be high enough to allow for modest gains by new entrants. So, it should be above the cost of inputs such as natural gas and coal. For example, the price to beat remains at the actual wholesale electricity procurement price does not give prospective entrants margin to compete with existing utilities. Second, the price to be defeated should be low enough, to allow as many customers to continue to consume electricity during the transition period.
Results
Price of electricity
One of the desired effects of this competition is lower electricity tariffs. In the first few years after deregulation in 2002, the occupancy rate for electricity increased seven times, at a price to beat about 15 cents per kilowatt hour (as of July 26, 2006, www.powertochoose.org) in 2006. However, up 43% from 2002 to 2004, input costs rose faster, by 63%, indicating that not all increases were borne by consumers. (See the Competition and the inclusion of new companies above for a discussion of the relationship between retail prices, inputs and investments.)
Compared to other countries, data from the US Energy Information Administration that published annual annual electricity prices indicate that the price of Texas electricity did rise above the national average immediately after deregulation from 2003 to 2009, but, from 2010 to 2015 has moved significantly below the national average price per kWh, for a total cost of $ 0.0863 per kWh in Texas in 2015 vs $ 0.1042 nationally, or 17 percent lower in Texas. Between 2002-2014, the total cost to Texas consumers is estimated at $ 24 billion, averaging $ 5,100 per household, more than a comparable market under state regulation.
New Competition
The price to beat seems to reach its goal of attracting competitors to the market during the period until January 1, 2007. It allows competitors to enter the market without allowing shareholders to weaken their prices. It also gives the energy consumer the ability to compare the energy rates offered by different providers. Unregulated providers cut prices to beat only by small margins considering that they have to balance lower prices (to attract customers and build market share) at higher prices (needed to reinvest in new power plants). Due to minor differences in competitive prices and slow (yearly or more) purchasing process, price reductions due to competition are very slow, and it takes several years to compensate for initial increases by "traditional" power suppliers and move to lower levels. tariff.
One of the most successful free market benchmarks is the range of choices given to customers. Options can be viewed both in terms of the number of companies active in the market as well as the various products that the company offers to consumers. In the first decade of retail electricity deregulation in Texas, the market experienced dramatic changes in both metrics. In 2002, residential customers in the Dallas-Fort area could choose between 10 retail power providers offering a total of 11 pricing plans. By the end of 2012, there are 45 retail power providers offering 258 different pricing plans to residential customers in that market. Similar increases in the number of retail power suppliers and available plans have been realized in other deregulated power markets with the state.
Environmental Impact
In environmental impacts, results vary. With the ability to invest profits to meet further energy demand, manufacturers like TXU propose eleven new coal-fired power plants. Coal-fired power plants are cheaper than natural gas-fired power plants, but generate more pollution. When private equity firm Kohlberg Kravis Roberts and Texas Pacific Group announced the takeover of TXU, the company famous for charging the state's highest price and losing customers, they canceled plans for eight coal mills. TXU has invested more in the other three. A few weeks later buyers announced plans for two cleaner IGCC coal plants.
There is a positive environmental impact of retail price deregulation as well. The lucrative and growing Texas electric market has attracted substantial investment by wind turbine companies. In July 2006, Texas surpassed California in wind energy production.
Another positive environmental impact is the effect of higher energy prices on consumer choices, similar to the US market trend toward more fuel-efficient cars. Because electricity bills have increased, people reduce their electricity usage by using more moderate thermostat settings, installing insulation, installing sun screens, and other such activities. Texas utilities (like Austin Energy) also install sophisticated power meters that may one day allow variable pricing based on the time of day. This will allow energy customers to save money by further adjusting their consumption based on whether it occurs during periods of peak demand (high cost/high pollution) or outside peak hours (at night). Effects
on Renewable Energy
Due to the increasing use of natural gas soon after deregulation, new era energy tools such as wind power and smart-grid technology are greatly assisted. Texas's first 'renewable portfolio standard' - or requirement that state utilities gain some of their power from renewable energy such as wind - was signed into law in 1999, as part of the same legislation that deregulated the electricity market.
See also
- California electricity crisis
- Power provider switching
- Texas Law
- Oncor Electrical Delivery
- Federal Energy Regulatory Commission (FERC)
References
- http://www.senate.state.tx.us/75r/senate/commit/c850/c850_78.htm
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External links
- Marketplace PowerToChoose.org Operated by Texas Public Utilities Commission
- Texas Electricity Reliability Board (ERCOT)
- The Texas Public Utilities Commission website
- Video Resources on Texas Electricity Market Deregulation
- Texas Chamber of Commerce Association
- Electricity Ratio Comparison for Texas vs. State with Regulated Energy Markets
- INCORRECT CRITISM FROM TEXAS ELECTRIC DEREGULATION
Source of the article : Wikipedia
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