Texas’s deregulated electricity market raised consumer costs by $28B: WSJ

Texas’s deregulated electricity market has raised costs to consumers by $28 billion since 2004, according to a Wall Street Journal analysis published Wednesday.

The analysis found that consumers purchasing power from the deregulated electricity market have paid significantly more than state residents whose sources were traditional electric utilities.

The report comes after widespread power outages in Texas that left millions of residents without power for days amid freezing temperatures. That was followed by many households receiving sky-high electricity bills, with warnings from experts that consumers are likely to be hit with covering the costs for grid upgrades.

The decision to have a deregulated electricity market stems back to 1999 when legislation was first introduced to deregulate the market in Texas. Supporters of the bill said it would create more competition in the sector and lower prices for consumers.

However, households under the deregulated market paid rates 13 percent higher than the nationwide average from 2004 to 2019, according to the Journal. Those who used traditional utilities in Texas paid 8 percent less than the national average during that time frame.

The data used for the analysis came from the federal Energy Information Administration.

Although deregulation in Texas was designed to allow for more competition, mergers in the industry have left Texans with two main retail electricity providers.

Texas is not the only state with some deregulated electricity market, but other states give residents the choice between retail electricity and electricity from a regulated state utility.

When the bill in Texas was passed for a deregulated market, 60 percent of residents were forced to get their electricity from a retail company, the Journal reported. 

Investigations into electric companies and the reason for the massive outages during the winter storm are now in the works as part of an effort to ensure Texas does not face similar power shortages in the future.