New Report Says Electricity Restructuring Is Working In Texas

According to the Alliance for Retail Markets, Texas’s restructuring law is working. They measure that success by consumer switching, which at 6.5 percent is high relative to switching experience in other states, and by estimated consumer savings of $6-14/month for those who have switched. I have quibbles with these measures of success, because it does not capture the extent to which the incumbent utilities have changed their pricing and service offerings to remain competitive with entrants. But the Texas PUC publishes a monthly report card on the status of electricity restructuring; their September 2002 report card includes two other indicators of success:

1. Consumers in all regions have substantive, meaningful choices
2. Over 80% of “non-price-to-beat” customers are receiving service under a competitive contract

That second point captures the extent to which incumbents are offering attractive competitive alternatives to try to retain market share. The report card also indicates market shares, which in the 5 regions are about 80% for the incumbents and 20% for the entrants. That’s certainly better than we’ve seen in telecom!

And the consumers are better off.

UPDATE: Here’s a Dallas Morning News article on the first year of electricity restructuring. Thanks to my colleague Bob Poole for forwarding the article.