Talk:Deregulation of the Texas electricity market

Article is PR

In response to the comments below, I have reason to believe that this article was compromised by the public relations firm assisting the private equity purchase of TXU. The firm's name was Public Strategies. A quick check of modifying IP addresses around the 2007 period does not show any direct link to the company, but I believe that the editors are hiding behind usernames with their IP addresses hidden. I highly encourage someone with the ability to look into this to do so.

The entire section regarding the price-to-beat and the pegging of price to natural gas prices is completely POV, disregarding actual practice and empirical evidence in deference to economic theory. De-regulation in other states has also produced mixed results on price. To state the model in the article is fact and will produce that outcome is completely POV and is highly debated by economists, as witnessed by the suspension of de-regulation in some states, as well as other states unwillingness to participate.

Tags/NPOV Jan 2007

First comment:

Folks, this article is a very incomplete look at the Texas deregulation process and recent history. I'm not an advanced wikipedia user, but looking through the revisions some meaningful facts have been added and removed over the history of the article. I suspect that emotional and ideological motivations were behind much of this editing.

The article needs a lot more fleshing out of why the deregulation was done, the history of electricity in Texas, and how readers can evaluate ongoing results.

(Please note: my comments and edits are motivated by the desire to lay out the facts and the possible results, good and bad - in a complete and understandable form.)

Second comment:

The POV of this article is mostly factual except for the emotionally charged Quick Look section. This section has started to list some of the outcomes of Texas's deregulation, but it borders on a POV in that it lists facts in a way that may slant how they are viewed.

For example, it is a fact that consumer electricity prices have skyrocketed since 2002. What is not mentioned is that the prices of inputs (prices of raw materials, such as natural gas, oil, coal) have gone up more than the prices passed on to consumers. Putting these two facts together, plus a little economic insight, it is fairly clear that competition is keeping prices reasonably low given the cost environment.

A related problem with this results section is that some desired categories of results are not mentioned, such as the problem of stagnant investment in electricity generation. The existence of this problem is what, after all, has caused blackouts in the northeast and in California (you have to have a lack of supply to have a blackout). With the possibility of a dynamic market, in which prices are not set by the state and in which companies can market their electricity and try to get as many customers as possible, two things occur:

Providers compete based on price and service, so prices stay reasonably low (but adjust to economic conditions, such as input costs);
Those with excess capital are attracted to examine the market for its growth possibilities; if they find opportunity for growth, they often will invest to supply the projected demand

The second point is just as noteworthy as the first; and results will take longer to see in Texas because of the longer-term nature of seeing investments come to fruition. But the facts so derided by other writers here point to an early understanding of the benefit of deregulation to Texans: the fact that 60 firms have started up to supply the demand (many of whom no doubt are either building or looking into building new sources of electricity) is exactly the kind of result one expects from a properly operating market that is geared toward serving customers - 'before' a lack of supply causes a blackout.

I have made some brief edits to attempt to add balance and bring closer to NPOV, but the article is so thin that it needs a lot more work.

Update: News today (March 13, 2007). After an independent auditing study, the Texas state PUC found TXU has abused the market by manipulating supply at peak periods during the Summer of 2005, adding $20million in profits during that short term. While deregulation works well in non-essential commodities, it has continually proven to be a source of fraud and massive abuse of consumers here in the US with regard to electricity. These events must be included in this article. They are, after all, part of the history of Deregulation of the Texas electricity market.

Additionally, you state that 60 firms have started up to supply demand. A more appropriate statement would be that 60 "middlemen" have started up who buy power from TXU, Reliant, and a couple other providers to deliver it to consumers over the same old wires at double the price. Please state another commodity industry where the addition of 5 dozen middlemen REDUCES prices.

Reply to last statement: Middlemen in the mobile phone business have reduced prices for consumers (See Cricket Wireless as one example).

—The preceding unsigned comment was added by Freedomofproperty (talk • contribs) 14:48, 15 January 2007 (UTC).[reply]

Ah HAH!

Evidently the notorious bias was a result of a blatant text-dump from " http://www.rppi.org/ps281central.html "/" http://www.rppi.org/ps281.pdf ". Judging by [1] I don't think it's a very reliable source and so have removed everything from it that I could find. 68.39.174.238 02:40, 23 October 2006 (UTC)[reply]

Tagged

I've added a bias-tag again as I believe that the current state of the article is both wantonly biased (I could easily discern the leanings of the author of most of it) and making questionable statements. If the latter are all sourced, feel free to change my tag to just "bias" and remove the citation one. 68.39.174.238 00:09, 22 August 2007 (UTC)[reply]

Billing customers for coal-generated kilowatt-hours at more expensive natural-gas prices

The sections titled "A note on why natural gas prices are used instead of coal prices" and "What will basing the price on natural gas prices do in the longer term?" strike me as being disingenious apologia for the practice of not passing lower coal-generated power costs on to customers. Texas utility bills already include variable pricing (price for first 250 kwh, price for all additional kwh, fuel factor charge). It would, in theory, be a straightforward matter of accounting to proportionally price the kilowatt-hours consumed by what percentage of the provider's power comes from varying sources. Agarcialw (talk) 05:38, 5 December 2007 (UTC)[reply]

Also, for the lettuce/sandwich example, when presented with 10 customers instead of 5, why not bill at $6 per sandwich, since you own all the sandwiches, your average sandwich cost is $5/sandwich, and your average profit per sandwich is still $1/sandwich? This seems to be a regulated environment result (one producer for all the sandwiches), whereas in a deregulated environment where each sandwich has its own producer the price has to be set at $7/sandwich (otherwise at $6 the last 5 producers earn $0 = they don't earn that necessary $1 profit to cover depreciation/improvements = bankruptcy and the first 5 producers earn $3 on each of their sandwiches = outsized profits, whereas the single producer environment results in an average profit for the producer of $1 per sandwich). The regulated environment also produces a lower total cost to the customer, in the deregulated environment $7/sandwich x 10 sandwiches = $70 total cost, in the regulated environment $6/sandwich x 10 sandwiches = $60 total.

Can someone please explain how then deregulation is supposed to benefit the customer? The average price is always < the marginal price, and the average price can only be used in a regulated single owner environment, whereas the marginal price must be used in a deregulated environment —Preceding unsigned comment added by Efranco (talk • contribs) 07:43, 15 May 2008 (UTC)[reply]

It only helps by letting users ahve the choice to choose their REPs. 201.144.87.36 (talk) 22:23, 8 December 2009 (UTC)[reply]

Price measured in kilowatt-hours, not in kilowatts

One section says that the price is 15 cents per kilowatt, but they must mean kilowatt hour. I don't have time to look through the reference myself. --Mrberryman (talk) 13:03, 24 November 2009 (UTC)[reply]

Movement to stop/delay deregulation in rest of Texas

Apparently, the eastern part of Texas, which is not part of ERCOT, is trying to delay or stop deregulation in their part of the state. See: http://www.marshallnewsmessenger.com/news/content/news/stories/2008/061508_web_electric.html

Utility Outreach Reporter (talk) 18:54, 11 July 2008 (UTC)[reply]

If I read correctly, it says all Texas is deregulated, isn't it? And besides, the page seems like copied from a presentation, because it states some titles as questions, which is not standard in wikipedia 201.144.87.36 (talk) 22:21, 8 December 2009 (UTC)[reply]

Some areas like Montgomery county (Entergy) are definitely not deregulated yet. — Preceding unsigned comment added by 72.190.38.104 (talk) 19:59, 27 February 2013 (UTC)[reply]

Sources of interest

The following sources should be useful for anyone interested in improving this article,

Steffy, Loren (2014), The Generation Gap, Texas Monthly {{citation}}: Unknown parameter |month= ignored (help)
Dyer, R. A. (2014), Deregulated Electricity in Texas (PDF), Texas Coalition for Affordable Power

— ArtifexMayhem (talk) 21:14, 30 March 2014 (UTC)[reply]

Dubious: approval date

The first sentence of the article, quoted below, is inaccurate for many reasons:

"Electricity deregulation in Texas, approved by Texas Senate Bill 7 on January 1, 2002, called for the creation of the Electric Utility Restructuring Legislative Oversight Committee to oversee implementation of the bill."

The Texas Senate meets biennially in odd numbered years unless there's a special session. There was no special session in 2002.
Bills often take effect on September 1 of the year in which they are signed or on January first of the following year. Senate Bill 7, passed in 2001 (76th Session of the Texas Legislature), pertained to pre-trial criminal procedures.^[1]
During the previous session in 1999, the Legislature passed Senate Bill 7 pertaining to electric utility deregulation. It was signed into law by then Governor George W. Bush on June 18, 1999 and became effective on September 1, 1999.^[2]
The creation of the oversight committee is a minor aspect of the bill.
January 1, 2002 is the date that a major provision of the bill became effective, namely "retail customer choice."
"Retail customer choice" may or may not have actually been fully implemented on January 1, 2002. In 1999 when the bill passed, the 2002 date was aspirational and may not have actually been achieved.

The above is drawn from reference to bill analysis and mark-up history available through the Texas legislative website, Capitol.Texas.gov. Senate Bill 7, passed in 1999, was a major milestone, but not the only component of electric utility deregulation in Texas. SB 7 (1999) pertains primarily to residential and small commercial customers, so there may be previous or subsequent bills that pertained to major commercial customers.A.T.S. in Texas (talk) 16:57, 17 February 2021 (UTC)[reply]

References

^ "Bill: SB 7 Legislative Session: 77(R)". Capitol.Texas.gov. Retrieved 17 February 2021.
^ "Bill: SB 7 Legislative Session: 76(R)". Capitol.Texas.gov. Retrieved 17 February 2021.

[1] "Bill: SB 7 Legislative Session: 77(R)". Capitol.Texas.gov. Retrieved 17 February 2021.

[2] "Bill: SB 7 Legislative Session: 76(R)". Capitol.Texas.gov. Retrieved 17 February 2021.

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[2]