The introduction of competition to the Texas retail electric industry, which allows customers to choose their energy provider, has made more types of consumer assistance and protection possible for vulnerable customers and those who need help paying their bills to avoid disconnection of their service.  Because customers can choose providers, customers can vote with their feet and pick an energy supplier that offers expanded customer assistance, deferred payment plans, and even a voluntary disconnect moratorium.  As more customers choose electric companies offering these expanded protections, competitors will be forced to follow suit by adding such protections, to avoid losing customers.  And the state’s Public Utility Commission, as it always has, still retains authority to order a suspension of service disconnections or other measures if prolonged heat or other conditions warrant.

 It’s important to remember how energy companies operated before competition was introduced.  Before 2002, the old monopoly utilities (like Texas Utilities and Houston Lighting and Power) had no discretion to offer any extra level of service or protection to customers.  Because their costs and revenues were regulated by the Public Utility Commission, the old utilities could only perform actions as defined in specific “tariffs,” or legal documents outlining specific actions that governed their relationship with their customers. 

 Because these tariffs were regulated, utilities could not deviate from them, even when it would benefit customers.  Thus, for example, if Texas was suffering a prolonged heat wave, the utilities could not voluntarily decide to suspend disconnecting customers, to ensure that no one lost air conditioning and was not exposed to dangerous heat.  Instead, such actions could only be done under order from the Public Utility Commission.  While the Commission did take temporary measures in 1998 and 2000 before competition was introduced to suspend disconnections to some types of customers, the actions were narrower in scope than the plans offered voluntarily by some competitive energy suppliers today.

 Because there is now competition in the industry, electric companies don’t need approval to offer customers extra levels of service, or greater protections.  That allows electric companies to respond to customers’ needs, and is why, last year, six electric companies voluntarily decided to suspend disconnection of service to non-paying low income and elderly customers during the summer.  These energy providers offered customers extended payment plans to repay any amounts deferred over the summer, to ensure that the most vulnerable customers had electricity to combat the oppressive summer heat.

 This summer, two energy providers are so far offering similar disconnect moratoriums to offer customers extra protection, and more will likely announce similar plans.  Other electric companies offer expanded low-income assistance and similar flexible payment arrangements to help customers avoid disconnection during the summer — steps that would not be possible if a strict tariff still governed the industry.

 And if weather conditions call for a mandatory moratorium to protect the public health, the Public Utility Commission retains the same authority to order a suspension of disconnections under competition as it did when companies were regulated monopolies (as it did in ordering suspensions in 1998 and 2000).  In fact, in 2006 the Commission ordered a summer disconnect moratorium, because the state’s low-income discount program (Lite Up Texas) was not funded by lawmakers that year.  Funding has since been restored, and eligible customers can save up to 30% off the regular price of electricity by signing up with Lite-Up Texas.  The discount is a set amount in cents per kilowatt-hours off whatever price the customer pays, so the discount will make bills even lower if the customer shops around for a lower electric rate.  Using SaveOnEnergy.com to find the lowest electric rate takes only a few minutes, and is one of the simplest things customers can do to lower their summer bills.

A raging controversy regarding Oncor Electric Delivery’s application to have customers pay $93 million for nearly 1 million “smart” meters purchased in 2004 and 2005, which do not meet the state’s new smart meter standards, shows one of the biggest benefits to customers from competition in the electric industry — customers don’t have to pay for unwise or plain dumb decisions made by electric companies.

 

First, some background.  In Texas, part of the electricity industry is open to competition, which means that companies are no longer guaranteed a “rate of return” on their investments as was the case under monopoly regulation.  Specifically, the generation part of the industry is open to competition, and so is the retail portion.

 

However, the delivery of electricity, which is the business Oncor is in, remains regulated, in the same way it was 100 years ago.  In general, that means Oncor is entitled to recover its prudently incurred costs, and must earn a mandatory rate of return on all its investments, even if the investments turn out to be bad decisions, in some cases. 

 

In 2004 and 2005, Oncor (known as TXU Electric Delivery back then) bought 898,000 remote-control meters in a bid to create a “smart” electricity system.  However, at that time the state had not finalized rules governing the minimum functional requirements for smart meters.  And, it turns out Oncor’s 898,000 meters now fail to meet those final standards, meaning the meters can’t be used to deploy a smart grid to residential customers.

 

However, Oncor still wants customers to pay $93 million to recover the costs of the archaic smart meters, arguing that buying the meters even before final standards were adopted was a prudent business decision designed to save customers money.  Oncor said it had no idea the meters would be rendered useless for residential customers in only three years.

 

The Staff of the Public Utility Commission and several other groups are opposing Oncor’s request to make customers pay for the outdated meters. 

 

But the key fact is if Oncor were not a regulated utility, it would not even have the ability to ask for $93 million to cover its poor choice.

 

In other parts of the Texas electric market, customers don’t pay for bad decisions, because competition shifts risks from customers and places it on investors.  That’s because under competition, electric companies don’t have any guarantee of cost recovery, or a mandated rate of return.  If businesses in competitive market don’t run their business soundly, they simply lose money — they can’t stick their hand out and expect customers to foot the bill.

 

Consider, for example, something very similar to the Oncor situation, except relating to the Texas retail market, where competition exists.  Although Texas retail energy providers do not offer smart meters (since companies like Oncor handle that), retail companies do offer several similar smart grid applications — things like smart thermostats, in-home electric usage monitors, and other devices that interact with the smart grid.  Like smart meters, these technologies may become obsolete over time depending on how fast technology evolves.

 

Imagine that a hypothetical retail electric company, called Imaginary Power, spent $100 million giving its customers smart thermostats to attract customers and help them save money.  Then, suddenly, changes in how the smart grid works made the smart thermostats obsolete (perhaps by using a new, different communication method), meaning customers could no longer use the smart thermostats to save on electricity. 

 

Because of competition, Imaginary Power would have no right to try and recoup its cost for the $100 million spent on the obsolete thermostats.  While it could try and recover costs through higher prices, customers would be free to move to a competitor with lower prices, and customers would not be saddled with paying for a dumb business decision. 

 

The same is true when it comes to power generation, which is open to competition.  Thirty years ago, when generation was still a monopoly with no competition, customers paid billions of dollars to regulated utilities to pay for abandoned nuclear power plants, many of which were stopped and scrapped in the middle of development because, after Three Mile Island, nuclear power fell out of favor.  But even though the plants weren’t finished, customers paid billions to utilities for the costs of the plants.

 

That could not happen today, at least not in Texas where there is competition.  And the comparison could not be more timely as the federal government debates climate change, which could make some types of power plants obsolete.

 

For example, if the government does end up regulating carbon emissions, building a coal plant right now will end up being a dumb decision, because it will cost too much money.  However, if the coal plant is built under traditional regulation, customers will be stuck paying for an unwise investment in coal, because utilities have the right to recover costs, even if carbon regulation makes the coal plant a white elephant.

 

But under competition, the risk that the coal plant would become uneconomic lies with the generator, not the customers.  If a generation developer decides to build a power plant in the wrong area, or decides to use the wrong fuel (like picking coal just before the government decides to place a tax on greenhouse gas emissions), it’s the company that pays the price, and customers are shielded from any bad decisions.  Under competition, a generator can’t make customers pay to compensate it for building an obsolete coal plant; shareholders have to foot the bill.

 

While Oncor’s $93 million request for archaic meters will have to be adjudicated according to the rules of a regulated system, Texas customers can at least know when it comes to generating and retailing power, they are shielded from such imprudent costs thanks to competition.

The Texas Summer is here.  Don’t get burned by high electricity prices.

 

Join us today at noon for a live chat with Current Energy partner Joseph Harberg and Brent Moore, chief executive of SaveOnEnergy.com.  They’ll answer your questions on choosing an electricity provider, finding the best rates and more.

 

Go to dallasnews.com to participate or email questions to chat@dallasnews.com.

 

http://energyandenvironmentblog.dallasnews.com/archives/2009/06/live-chat-scheduled-how-to-sav.html

Many parts of Texas are seeing their first heat waves of the year, with blistering temperatures well into the 90s.  That means Texans will be turning up their air conditioners to cope, driving up their electric bills along with it.

 

However, there are a lot of easy ways to save on electricity, and to beat the heat at the same time.  The easiest thing to do is shop around for a lower electric rate that can save you hundreds, if not thousands, of dollars each year. 

 

Using SaveOnEnergy.com to find a low electric rate is the quickest and simplest way to lower your power bill.  SaveOnEnergy.com makes energy providers compete for you business, meaning you get their lowest rate.  And SaveOnEnergy.com allows you to compare offers and shop for a cheap electricity rate in the comfort of your own home, any time day or night.  And because SaveOnEnergy.com screens all of its suppliers and recommends only reputable energy companies, you can shop knowing that the low rate you find will be honored, and your provider will be around for the long haul.

 

There are dozens of other no-cost and low-cost ways to further reduce your electric bills this summer, all without any up-front expense or requiring any big changes in your daily routines:

 

Cooling and Water Heating

·          Set your air conditioner 5 degrees higher to save up to 20% on cooling costs.  Setting your thermostat to 78 degrees instead of 74 during warmer months can save up to $260 a year in cooling costs.

·          Use fans to make indoor temperatures feel cooler, most ceiling fans use less energy than a light bulb.

·          Clean or replace air filters. Dirty filters can increase operating costs by 20 percent.

·          Lower the thermostat on your hot water heater to 120°F or the “Normal” setting when home, and to the lowest setting when away. Water heating accounts for about 13% of home energy costs.

·          Install a programmable thermostat to keep your house comfortably warm in the winter and comfortably cool in the summer.

·          Avoid setting your thermostat at a colder setting than normal when you turn on your air conditioner. It will not cool your home any faster and could result in excessive cooling and, therefore, unnecessary expense.

·          During the summer, keep the window coverings closed during the day to prevent solar gain.  Close curtains on south- and west-facing windows during the day, and install awnings on south- and west-facing windows.

·          Apply sun-control or other reflective films on south-facing windows to reduce solar gain.

·          Install white window shades, drapes, or blinds to reflect heat away from the house.

·          Avoid placing lamps or TV sets near your air-conditioning thermostat. The thermostat senses heat from these appliances, which can cause the air conditioner to run longer than necessary.

·          Plant trees or shrubs to shade air conditioning units but not to block the airflow. Place your room air conditioner on the north side of the house. A unit operating in the shade uses as much as 10% less electricity than the same one operating in the sun.

·          Have your air conditioning unit serviced to cut 15% of cooling costs.

·          Seal cracks, gaps, leaks and add insulation to save up to 20% on home cooling costs.

 

Kitchen and Laundry

·          Let your dishes air dry instead of using your dishwasher’s drying cycle; if you don’t have an automatic air-dry switch, turn off the control knob after the final rinse and prop the door open slightly so the dishes will dry faster.

·          Wash your clothes in cold water using cold-water detergents whenever possible.  About 90% of the energy used in a clothes washer goes to water heating, and using cold water can save up to 50 cents per load.

·          Wash only full loads of dishes and clothes.

·          Don’t keep your refrigerator or freezer too cold. Recommended temperatures are 37° to 40°F for the fresh food compartment of the refrigerator and 5°F for the freezer section.  To check refrigerator temperature, place an appliance thermometer in a glass of water in the center of the refrigerator. Read it after 24 hours. To check the freezer temperature, place a thermometer between frozen packages. Read it after 24 hours.

·          Regularly defrost manual-defrost refrigerators and freezers; frost buildup decreases the energy efficiency of the unit. Don’t allow frost to build up more than one-quarter of an inch.

·          Dust the refrigerator coils – this helps refrigerators run more efficiently.

·          Make sure your refrigerator door seals are airtight. Test them by closing the door over a piece of paper or a dollar bill so it is half in and half out of the refrigerator. If you can pull the paper or bill out easily, the latch may need adjustment, the seal may need replacing, or you might consider buying a new unit.

·          Cover liquids and wrap foods stored in the refrigerator. Uncovered foods release moisture and make the compressor work harder.

·          Be sure to place the faucet lever on the kitchen sink in the cold position when using small amounts of water; placing the lever in the hot position uses energy to heat the water even though it may never reach the faucet.

·          Wash and dry full loads. If you are washing a small load, use the appropriate water-level setting.

·          Dry towels and heavier cottons in a separate load from lighter-weight clothes.

·          Don’t over-dry your clothes. If your machine has a moisture sensor, use it.

·          Clean the lint filter in the dryer after every load to improve air circulation.

·          Use the cool-down cycle to allow the clothes to finish drying with the residual heat in the dryer.

·          Consider air-drying clothes on clothes lines or drying racks.

 

Home Electronics

·          Turn off your computer and monitor when not in use.  Turn off your computer every night.  Many people believe that equipment lasts longer if it is never turned off. This incorrect perception carries over from the days of older mainframe computers.

·          Plug home electronics, such as TVs, DVD players, VCRs, battery charges, printers, into power strips; turn the power strips off when the equipment is not in use (TVs and DVDs in standby mode still use several watts of power).  Taken together, these small items can use as much power as your refrigerator.

·          When not using your laptop’s AC adapter, be sure to unplug it from the electrical outlet, rather than from the laptop.  When plugged into the wall outlet, the transformer in the AC adapter draws power continuously, even when the laptop is not plugged into the adapter.

·          Use your computer’s power saving settings, including automatic monitor shut-off and “sleep” mode when not in use, to make sure energy is saved.

 

General

·          Use compact fluorescent light bulbs (CFLs) to save 75% off lighting costs.

Over the past 10 years, the Texas economy has grown by a quarter of a trillion dollars, with real gross product up $255 billion dollars since 1999, after adjusting for inflation. The prodigious growth has coincided with a revolution in the state’s electric industry , as lawmakers introduced competition into the system in 1999, paving the way for billions of dollars in new investments, dozens of new competitors, and cleaner, more efficient power.

As noted in the Midland Reporter-Telegram , the positive effects of competition continue to grow, and now total an impact of nearly $22.4 billion in total spending in the economy each year. Competition in the electric industry accounts for $10.3 billion in annual output, $6.3 billion in annual personal income, and almost $4.2 billion in annual retail sales. More importantly, competition also accounts for more than 131,000 permanent jobs.

Moreover, the economic stimulus associated with competition is now responsible for $761 billion in annual state revenues and $338 million in resources to various local governments across Texas .

All this economic activity was made possible by Senate Bill 7 in 1999, which allowed competitors to enter the Texas electric market, bringing new investment, new ideas, and new jobs to the industry and state.

Competition has made the industry more efficient, with the savings passed onto the customer. Furthermore, competition has given Texas businesses different options for buying electricity — innovative products that meet their specific usage patterns, load characteristics, risk appetite, and interest in renewables.

Ten years ago, Texas businesses only had one option for buying electricity : a one-size-fits-all rate that couldn’t be customized to fit their unique needs. Now, over 100 different electric companies compete to win customers’ business, and businesses can choose from a myriad of different options: fixed-rates, variable rates, hybrid rates, green plans, demand response products, distributed generation, and much more. It allows businesses to find what works for them, while saving them money.

Meanwhile, electric competition has led to billions of dollars in new, cleaner power generation plants being built. In particular, since 1999, Texas has added over 4,000 megawatts of clean, renewable wind power, surpassing California as the number one state in the U.S. for wind power. The investment in wind farms and other renewable sources, together with those for other types of power generation and transmission, have led to billions of dollars in economic activity and tens of thousands of jobs across the state.

The window on lower electric rates in Texas may be closing as summer heat and higher power demand approaches, making now the best time to lock in a lower electric rate before rates jump for the summer.

 

Barry Smitherman, chairman of the Texas Public Utility Commission, said that “now is the time to lock in a price for electricity. Prices are really, really low right now.”

 

Lower industrial demand for natural gas caused by the recession has swelled stockpiles, pushing prices down to levels unseen in years.  That, in turn, has depressed energy prices, since natural gas fuels most power plants in Texas.  The end result is that Texas electric rates are about 50% lower than they were this time a year ago, and now is the time to lock-in a cheap electric rate for the long run.

 

Locking-in a low, fixed rate is especially important for customers currently on month-to-month variable rates, which change with the market.  Customers on variable rates have enjoyed low prices in the spring and winter because natural gas prices have been low.  However, with summer heat set to increase the demand for natural gas in power generation, power prices are set to rise.  Customers on variable rates may see large increases in their rates.

 

That’s why it’s the perfect time to lock-in a low, fixed-price rate that won’t change even if electric and natural gas prices increase.  And fixed prices are currently at historic lows, and are just a cent or two higher than variable rates, a modest price for the assurance of locking in a cheap electric rate for 12 months, or even longer.

 

Still, it can be daunting to sift through the dozens of electric offers from competitive energy providers in the market.  That’s why SaveonEnergy.com takes the hassle out of finding the cheapest electric rate.  SaveonEnergy.com makes energy suppliers compete for your business, so you get the lowest rate. 

 

SaveonEnergy.com makes finding a new lower electric rate fast and convenient, so you don’t have to spend hours combing through complex offers and researching different electric companies.  And SaveonEnergy.com screens all its energy providers so customers only pick a reputable, stable company that will honor its pricing, provide high levels of customer service, and will be around for the long haul.  That makes SaveonEnergy.com your one stop shop for finding the lowest electric rate.

With Texas electric rates the lowest they’ve been in years, more and more customers are taking advantage of their ability to choose their energy provider and save money by switching.  With over 100 different electric companies in the market, it can get confusing to find the lowest rate, or provider with the best product and services.  That’s why SaveOnEnergy.com makes it easy for Texans to find a new electricity company, anytime day or night.

 

According to the most recent data from the Electric Reliability Council of Texas (ERCOT), which runs most of the state’s power grid, today’s lower power prices are inducing more customers to switch. 

 

So far this year, some 250,000 customers have switched to a new energy supplier — to get a lower rate, better service, or a green energy product.  That’s 25% higher than the number of switches through this time last year.

 

In April 2009 alone, some 64,000 customers chose a new electric company, a 10% increase from April 2008.

 

More and more customers are switching because prices are lower than they have been in years.  Customers in the Dallas-Ft. Worth region (Oncor) can lock-in a low, fixed rate of 10¢ per kilowatt-hour for 12 months by switching to a new energy supplier.  Houston-area customers (CenterPoint) can get a 12-month fixed rate for about 10.7¢.  Locking-in these low rates today by choosing a new provider can mean guaranteeing savings now and into the future, even if prices rise again.

 

But there’s more to consider than just price when it comes to choosing a new energy provider.  Customers need to consider the supplier’s track record, financial condition, and level of customer service.  Bonus features that some providers offer, like airline miles, gift cards, and bill credits, are another important factor than can increase the value from your energy purchases. 

 

That’s what makes SaveOnEnergy.com an invaluable tool for customers looking for a new energy supplier.  Not only does SaveOnEnergy.com provide a simple and easy way to compare different options and find the lowest rate, but SaveOnEnergy.com does all the homework for customers.  SaveOnEnergy.com only recommends established, proven energy providers with stable business models and established track records of serving customers.  Customers using SaveOnEnergy.com can be assured they won’t sign up with a fly-by-night operation that will leave them stranded. 

 

Additionally, SaveOnEnergy.com does all the research into all the special deals and bonus features electric companies offer, so you can easily compare plans and find the best rate for you.  SaveOnEnergy.com breaks down bonuses like airline miles, bill credits, loyalty programs, gift cards, and other benefits for signing up with a specific company. 

 

SaveOnEnergy.com allows you to find the best electric rate possible, and to join the increasing number of Texans saving money on their electric bills by choosing a new provider.

With summer heat right around the corner, Texas electric bills will soon be increasing, and folks will be looking for any way they can to save on their power bills.  One of the easiest things to do is to shop around for a cheaper electric rate, especially now as energy prices are the lowest they have been in some two years.  SaveOnEnergy.com makes the process of finding the lowest electric rate simple and easy, and it can be done anytime day or night.

 

But aside from just paying a lower electricity rate, many Texans may consider trying to reduce their monthly usage in order to trim their monthly bills.  Although Texans might not know where to start, the good news is that there are programs in place to help them use less power.  Additionally, with various federal stimulus packages, now is probably the best time ever to look into installing energy efficient technologies or even “distributed” power — things like home solar panels.

 

The starting place for Texans looking to be more efficient should be with their local distribution utility — companies like Oncor, CenterPoint and AEP.  As part of the process to bring electric choice to Texas customers, the distribution utilities were required to meet energy efficiency targets for their service areas.  In fact, the state has set a goal of meeting 20% of each utility’s annual growth in demand through energy efficiency by December 31, 2009.

 

To meet these goals, the utilities have developed various incentive programs to encourage customers to reduce their electric usage, ranging from rebates for Compact Fluorescent Light Bulbs (CFLs) and new energy efficient appliances, to helping financing new, more efficient air conditioning systems or retrofitting a home’s ductwork.

 

The utilities manage the incentive programs, and the installations are provided by local energy service or maintenance contractors, which compete for customers’ business.  The Dallas Morning News recently publicized some of the programs, noting the utility programs may help pay some of the costs, up to $1,500, or assist customers in finding third-party financing.  Other programs, including federal tax credits of up to $1,500, can cut costs too.

 

Each of the Texas utilities provides information on the incentive programs on its website:

Oncor Efficiency Programs

CenterPoint Efficiency Programs

AEP Texas Central / Texas North Efficiency Programs

Texas-New Mexico Power Efficiency Programs

 

Common programs include:

·          Discounts on CFL bulbs

·          Payments for Recycled Refrigerators

·          Incentives for High Efficiency Air Conditioning Installations

·          Incentives for Home Energy Audits

·          Discounts for Solar Water Heating Systems

·          Incentive payments for Solar PhotoVoltaic Installations

·          Low-Income Home Weatherization Assistance

 

Aside from these big changes, The Dallas Morning News provides many smaller steps to cut back on energy usage and save money, such as:

·          Set your thermostat at 78 or higher this summer.  Every degree below 78 raises your bill 5 percent to 7 percent.

·          Only do full loads of laundry and dishes. Turn off lights and fans when you leave a room. Fans only make you feel cooler. They do nothing to lower the temperature.

·          While you’re in the attic replacing the AC filter, measure the insulation. Many houses have 4 to 6 inches. You need about 12 inches. Big-box stores have blowers you can use to spray insulation if you buy from them.

·          Check air conditioning ducts. If you feel leaks between sections, or where the ducts connect with the air handler, seal them with metal tape and a coating of mastic.

·          Fill any exterior gaps, especially around windows, with spray-in expandable foam.

·          Plant trees on the south and west sides of your home. The savings might take 10 years, but shade makes your air conditioner much more efficient.

Competition is rapidly decreasing Texas electric prices, as energy providers compete for customers’ business — and it’s not just the monthly variable rates which are seeing pricing declines.  Fixed-price contracts — an innovation not available from traditional regulated utilities — are falling as well, meaning not only can customers get a low rate for their electricity right now, but they can lock it in for 12 months, or even longer, guaranteeing them lower electricity rates for the long haul.

 

The cheapest electric rates in Texas remain the variable rates, which can vary month-to-month.  These rates are as low as 8.5¢ or 8.9¢ in some parts of Texas, including the Dallas-Ft. Worth area.  These prices are up to 15% lower than the old regulated rates of December 2001, right before the market opened, even when not adjusting for inflation.  Still, critics of customer choice dismiss these low rates since they may increase in the next month.

 

However, it’s undeniable that fixed-rate energy prices are falling just as fast, giving customers not only a cheap electricity rate, but peace of mind that their rate won’t go up in the next 12 months.  In fact, in just the last two months, fixed-price contracts in the populous Dallas and Houston regions have dropped over 6%, a phenomenal rate considering it’s been only 60 days.  The drops by service area are below:

 

One-Year Fixed Contracts: May 8, 2009 versus March 9, 2009

 

Service                            May 8                      March 9                     

Area                                REP Offer                REP Offer                   Difference

Oncor                                9.9¢                      10.6¢                         -6.5%

CenterPoint                      10.6¢                      11.3¢                         -6.2%

TNMP                                 9.9¢                      10.1¢                         -2.0%

AEP TNC                            9.9¢                      10.0¢                         -1.0%

AEP TCC                          10.7¢                      10.9¢                         -1.8%

 

As seen above, fixed rate contracts are below 10¢ in three regions, including Oncor (Dallas). 

 

It’s important to remember as well that fixed rates are something unique to the competitive market.  Under the regulated system, rates weren’t fixed, and customers couldn’t set their monthly budget or protect themselves against price spikes.  Monthly surcharges or riders were added to the regulated price, to cover a host of things like fuel costs, purchased power costs, and environmental upgrade and compliance costs, to name a few.  Customers could never be sure what price they would pay when using electricity.  With today’s low fixed price contracts made possible through competition, not only do customers get a low price today, they’re assured of keeping that low rate for the term of their contract, providing them with long-term savings and certainty.

Texas electric companies are continuing to lower their rates because of the competition in place in most of the state, which pits energy providers against each other to win customers’ business.

 

It’s a scenario not seen in many other states, where despite sharp drops in natural gas and wholesale energy prices, retail customer rates are flat, or even increasing, because there is no competition forcing electric companies to reduce prices.  Take for example Maryland, which recently conducted an auction to purchase power for utility customers who don’t choose an alternate supplier.  Although prices in the auction were lower, residential customers won’t see lower rates until October, because state regulations say the low cost must be “blended” with higher-cost power bought from several years ago, under Maryland’s regulated supply system.  In fact, rates will actually go up starting in June despite currently low wholesale pries, with bills expected to rise $16 for the year starting June 1.

 

Thus, regulation of rates is actually increasing prices for utility customers, but fortunately Maryland customers do have the option to switch to a company other than the utility, whose prices are lower.

 

Compare that with Texas, where competition among energy providers means customers receive lower prices immediately when the cost of electricity falls.

 

The latest energy provider to announce its intention to lower rates is Reliant Energy.  Its new owner, NRG Energy, said it expects to lower prices immediately upon closing its purchase of Reliant on May 1, just in time to bring customers lower rates for the summer.  Since Reliant is the second-largest electric provider in Texas, its price cut will likely trigger rate cuts among its competitors so that they don’t lose business — similar to airfare price wars in which consumers receive lower ticket prices as airlines try to undercut each other.

 

CPL Retail Energy, another one of the state’s biggest electric companies, also said recently it is dropping rates for many of its customers starting May 5.   The price cut of 6 percent follows a 15 percent price cut that took effect at the end of February.  The resulting average annualized savings will be approximately $480 per household.

 

Prices for green energy have also fallen.  Though the promotion just ended in April, Bounce Energy had been offering its 100% renewable plan at the same low rate as its lowest priced non-renewable product, in celebration of Earth Day.  It was also enticing customers to enroll by offering a $50 Home Depot Gift Certificate along with other incentives.

 

Such price cuts, and value-added bonuses, are only available in Texas because customer choice makes energy suppliers compete for customers’ business.  When customers can vote with their feet and shop for a better electric company, they save money.