April 5, 2002—Recent research released by XENERGY reveals that electric deregulation in Texas has resulted in several benefits for both providers and customers launching Texas to the forefront of electric retail choice.
Significant top line findings of the research include:
- Competitors are making money. The affiliated Retail Electric Providers (REPs) of the host local distribution companies (LDCs) are making money on their assigned customers.
- Customers are saving money. There is a 6% discount off of earlier rates for all but the largest customers. For those who have shopped, additional savings in the range of 10 to 30% are now available.
- Direct contact is more than ever the method to sign-up customers. A direct sales force is still the primary way to sign up large nonresidential customers.
- Customers, large and small, want assurances, simplicity, and savings. An “Enron Effect” is retarding customer shopping. Not surprisingly, customers need an extra incentive to switch away from the affiliated REPs. And while REPs are offering higher margin, valued added products, most consumers are not willing to purchase them, yet.
“There are profound lessons to be learned from the Texas market,” said Tom Michelman, senior professional, “in particular, the Public Utilities Commission of Texas (PUCT) jurisdiction over ERCOT, and their ability to coordinate wholesale and retail initiatives unlike any other market to date has been critical to the market’s success. However, what is occurring in Texas will have a far greater impact on national retail markets than simply providing lessons and a blueprint for similar success. Companies finding success in Texas now have a platform to expand into the other emerging retail markets.”
For information on the Retail Energy Markets study, contact Taff Tschamler (720) 241-0157.
