Secret Price of Power Hides What Texans Really Pay

The electricity industry and its regulators in Texas have consistently touted the state’s competitive retail market as good for consumers. But price data indicate many of those customers are failing to take advantage of the lowest rates.

Courtesy Texas PUC

Donna Nelson chairs the PUC

In speeches and at public hearings, Donna Nelson, chairman of the Public Utility Commission (PUC), has contended that the areas of Texas where electricity is sold by a variety of retailers — as opposed to just one utility company as in San Antonio and Austin — is a system that benefits consumers.

“I think what the rates now show us … is that competitive markets work,” Nelson said at a commission meeting earlier this year.

Similarly, in 2011, Nelson told the Gulf Coast Power Association, an industry group, that while critics may “look for any way to describe Texas’s restructured market as a failure,” Texas retail electric providers had rates well below the national average according to an example she cited. 

“Customers in Dallas-Fort Worth could choose from several different 12-month fixed-price offers at 8.4 cents per kilowatt hour,” Nelson told the group. According to federal data, the average price nationwide in 2011 was nearly 12 cents per kilowatt hour.

But how many customers in Dallas, Houston and other “competitive markets” were actually paying those low rates like the 8.4 cents per kilowatt hour Nelson mentioned?

Secret Data

If you asked the electric retailers, there would be a problem. You’d be told such data is kept secret.

“The price of electricity is proprietary,” said John Fainter, president of the Association of Electric Companies of Texas, an industry group representing big power companies including Dallas’s TXU Energy and Houston’s Reliant Energy.

Dave Fehling/StateImpact

Texas electric retailers keep price data secret

The price actually charged to customers is considered a “trade secret”.

“I’m not aware of being able to gather that information. That would actually be between the retail electric provider and the customer and their contract,” said Sheri Givens, a lawyer who heads the Texas Office of Public Utility Counsel, a state advocate for consumers.

But there is one place to get an idea what Texas consumers are actually paying for electricity: the federal Energy Information Administration (EIA). Each year, electricity retailers send their price data to the EIA, which later publishes each company’s total number of customers and the average retail price those customers paid for power.

The data suggest that in Texas, the power marketers offering the lowest prices had relatively few takers. For example, in the 2011 data, the number of residential customers paying that 8.4 cent rate (or less) cited by the PUC’s chairman amounted to about 125,000 customers.

By contrast, the data show that by far the greater number of Texas customers were paying much higher rates. The federal data indicate the companies doing the most business were the “legacy” companies, TXU Energy and Reliant Energy, with about 3 million customers. The average price customers paid was 12 cents per kilowatt hour. In other words, they paid prices that were 50 percent more expensive than what was available, and on par with the nationwide average.

The big players in the market say the federal government’s figures shouldn’t be trusted.

“There’s a whole lot of argument in the industry about how they calculate their rates,” said John Fainter, the spokesman for the industry group that represents TXU and Reliant.

Why Do So Many Pay So Much?

The federal data seem to support what consumer advocates say they see on a regular basis: People paying far more than they should for electricity.

“A lot of folks just don’t realize their contract has expired and they’ve dropped into a variable-rate plan,” says state consumer advocate Sheri Givens.

Givens takes part in workshops around the state to help educate consumers. She said one woman she recently helped had been paying a whopping 14 cents per kilowatt hour after unknowingly letting her contract expire. Givens showed her how to find and sign up for a much lower rate of just 8 cents.

Givens says there’s “an information gap.” Some industry representatives don’t disagree.

“There is still a block of customers out there who have not taken advantage of their opportunities to choose,” said Catherine Webking, an attorney with Texas Energy Association for Marketers, which represents companies with some of the lower rates but also a tinier share of the Texas market.

“Originally, there was more funding available to the Public Utility Commission for customer education than has been made available recently,” Webking said.

Comments

  • dick

    many of the low price providers on powertochoose.org have 1 or 3 month contracts simply to get you to forget that your contract expires in a short time. (nobody wants to switch electric companies 12 times a year). its also bull crap that every company has progressive plans. the more electricity you use, the more you save….but that also means no matter how much you try and cut down your electricity usage you end up paying the same…sometimes more!

  • Gill Connor

    I am paying these low rates now. So because people are too stupid or lazy to stay on top of their contract this entire system should be killed? Maybe our failing public schools should get the blame. They failed to educate these adults to manage their affairs. More proof that Texas needs School Choice and a Voucher system! When our children receive a proper education then your point about people over paying for electricity due to ignorance on their own part will no longer be valid! We don’t need any more nanny state than what we already have!

  • Mike

    All the rates seem to be based on 1000 kw per month for the special prices. I only use that much a couple of months a year. So what’s the point. There’s no benefit to switch or conserve…

    • Texas Jacked

      The rates are based on 1000 kw per month. I installed radiant barrier
      to lower my power bill, and staying close to the 1000 kw per hours per
      month is a challenge still. So I did what I could to save more power,
      raised the temperate in my house to 85 degree and turn off every
      unnecessary electric appliance and unplugged lots of things, I got it to
      drop under the 1000 kw hours a few times to save money. My thank you
      was an service charge of $10.00 for not using over 1000 kw hours per
      month that month and now they intent to charge $13.95 if you go under
      that amount. So what’s the
      point. There’s no benefit to switch or conserve… it’s all b.s. they
      don’t really want you to save money, the best thing you can do if you
      could afford is drop off the grid and run totally solar and provide your
      own power, but I’m sure those slim bags still have a way to steal your
      money, unless you create enough solar power to run your meter backwards
      so they could buy if from you at these excessive rates.

  • AECT

    AECT is glad to be included in this story, but we wanted to share a few facts that didn’t make the piece. For a decade now, millions of Texans have embraced the ability to choose the way they power their homes and businesses. Every competitive area within the ERCOT grid has variable and 1-year lock offer prices available that are lower in real prices (not inflation-adjusted) than they were ten years ago — but price is not the only factor consumers look at when choosing a plan. Competition gives consumers the ability to determine which retail electric provider they want to serve them, and select the electric options that best fit their lives, including renewable energy and innovative pricing plans.

  • guitargodkc

    What so many don’t realize is on top of the lower rate, there are charges on their bill for transmission. In Houston, Reliant and Centerpoint energy (same company) own all of the transmission lines and they charge other providers and their customers a fee to use those transmission lines effectively raising the overall rate. To see for yourself, take your total bill and divide by usage to see what you are actually paying. It may be much higher than that 8 cents you think you’re paying.

    • marie72

      If you sign up with Relienr you ate also taxed on your electric bill that’s why I never sign up with them…I use IGS Energy I am in a 12 month fixed plan 9.5, no min.use,no taxes and late as I always pay they have never 1 time come and cut me off.Also when you go to pay online they show you how many months you have left on your fixed plan…Stay away from TXU and Relient they are expensive and never charge your bill right!

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