KPRC 2 Investigates: How much are you paying for electricity deregulation?

Are you wondering how much are you paying for electricity deregulation? We have some answers

HOUSTON – Cheap and reliable electricity was the biggest selling point for the deregulation of the Texas electricity market. Now, 20 years after deregulation and weeks after the historic failure of the power grid, KPRC 2 Investigates reveals Texans have overpaid more than $28 billion for electricity.

Right now, on the state’s Power to Choose website, there are 134 options for electric companies and plans. But guess what? For the last 20 years, Texas consumers have been the losers.

“No matter who you choose as a retail electric provider, you’re still paying more than you should,” said the Associate Director of Texas American Association of Retired People (AARP), Tim Morstad. “We’re worried about low-income consumers. We’re worried about those who are really just asked to open their pocketbook and pay for electricity under deregulation.”

This is why he is worried: Some cities in Texas, like San Antonio and Austin, are not deregulated. Everyone in those cities gets their power and pays their bill to the same municipal electric company. You might be surprised to learn how this compares with Houston.

How much is deregulation costing us?

We crunched the numbers and discovered every year from 2004 through 2019, Texans in deregulated markets like Houston paid on average - far more for electricity than Texans in cities that pay a municipal electric provider.

In 2006, while we paid an average of 15 cents a kilowatt, Texas consumers in regulated areas paid just 10 cents. In 2014 when we paid 13 cents, they paid 11 cents. Same price comparison in 2019.

When comparing the totals paid for electricity in both deregulated and regulated areas, we found we have overpaid more than $28 billion because of deregulation.

“I think it is extremely unfair for the consumer, both commercial and residential,” said community advocate Emmy Ngo.

Houstonian Ngo volunteers in her Vietnamese community by helping people understand their bills and choose electric providers.

“It’s extremely confusing for them,” said Ngo.

The numbers show the only winners in the Texas deregulation electric market are the power companies collecting the cash and selling dozens of different confusing plans.

“This whole argument that a deregulated market causes cheaper energy prices is hogwash. It’s clearly not true,” said Rep. Jon Rosenthal.

The democratic representative is in his second term serving taxpayers in northwest Houston and Jersey Village. He has written eight house bills this session, focused on making our state’s electric market more reliable.

Proposed bills related to electricity

There are more than 200 proposed electricity bills working their way through the Texas Legislature right now. Many would require power generators to take care of their plants or be fined. The efforts are to make sure a massive outage like the one that killed 111 Texans in February 2021 doesn’t happen again.

What’s not currently under consideration in Austin is changing the way electric generators and providers charge customers, to make sure we are not paying more than we should.

“Not only were we the ones on the short end of the stick in February when our lights didn’t go on, but we’re also going to be asked one way or another to pay for this mess,” said Morstad.

Right now, ERCOT is owed more than $2 billion from energy companies that can’t pay their bills from the winter freeze. That amount will likely be added to all of our electric bills over the next several years.

A new group called Texas for Fair Energy Billing has a tool to help Texans contact their legislators via email, phone, or tweet.

We reached out to Reliant Energy for their take. A spokesperson pointed us to several studies that they say show rates in deregulated states have generally fallen in recent years, while rates in monopoly utility states tended to increase or remain flat.

What can I do about electricity rates?

If you would like to see changes in our electric market, like more consistent, less confusing pricing, now is the time to tell your state representatives. You can find your representative, read what they are doing to fix the problem, and click on a link to send them an email.

We reached out to all area state lawmakers in Austin to see what they are doing about your electricity bills. Check out the detailed responses here.

About the Authors:

Passionate consumer advocate, mom of 3, addicted to coffee, hairspray and pastries.

Award-winning TV producer and content creator. My goal as a journalist is to help people. Faith and family motivate me. Running keeps me sane.