By Eileen O'Grady
HOUSTON, Sept 3 (Reuters) - Electric consumers in Texas' deregulated power market are enjoying 20-percent lower prices this summer despite searing heat that pushed power use to an all-time record in July.
Electricity is being offered for less than 10 cents per kilowatt-hour, down 20 percent from last summer in areas where electric retailers battle to attract customers, like Dallas and Houston.
'Competition has pushed down prices below those found in noncompetitive jurisdictions,' said Texas Public Utility Chairman Barry Smitherman.
Customers of municipal utilities -- such as San Antonio and Austin -- along with areas outside the state's primary grid, still pay set rates that are slow to change.
Nationally, falling power use by large industrial customers due to the recession and natural gas prices at 2002 levels have led to lower wholesale electricity prices and Texas retailers are passing along the savings to their customers.
Since being purchased by NRG Energy in May, Houston-based Reliant Energy has cut its power prices twice.
In late July, TXU Energy, the state's largest retailer, trimmed its prices to the lowest level since 2005. Many of the state's two dozen active retailers have taken similar action.
Gas, which started 2009 above $5 per million British thermal units, has tumbled to less than $3, below the average cost in 2002, the year Texas moved to competition.
'It's clear that the market has responded to lower wholesale prices which are reflective of gas prices,' said John Fainter, president of the Association of Electric Cos of Texas (AECT), an industry group with regulated and unregulated members.
Gas is the dominant fuel used to generate power in Texas and wholesale power prices closely track moves in gas.
The Texas market -- which eliminated regulated rates for 22 million customers -- has been praised by the industry but was blasted by politicians and consumer advocates as customers bore the brunt of rising market-based prices when gas hit $14 after Hurricane Katrina in 2005 and $12 in 2008.
'Last year, a customer on a variable-rate plan probably noticed rate increases in 30 to 60 days,' said Terry Hadley, a PUC spokesman. 'By the same token, those rates have come down faster. In the competitive market, things happen quicker.'
Since Texas households use twice as much power as the national average to run air conditioners in the summer, bills are likely to exceed $200-$300 in the hottest months of the year.
Compared to 2008, however, Texans have more and cheaper electric plans to choose from. Prices for one-year, fixed-rate plans have dropped 24 percent to an average of 11.4 cents per kWh, said AECT.
Smitherman also credits abundant Texas wind generation for keeping pressure on wholesale power prices. Texas leads the nation with more than 8,100 megawatts of wind capacity.
In 2008, summer power prices spiked due to gas and increased grid congestion blamed on dozens of new wind farms.
'We are likely to be in for a period of sustained low prices as gas prices stay low and we continue to build transmission to relieve more congestion and add more wind to the mix,' Smitherman said.
(Editing by Christian Wiessner)
((eileen.ogrady@thomsonreuters.com; +1 713 210 8522; Reuters Messaging: eileen.ogrady.reuters.com@reuters.net)) Keywords: UTILITIES TEXAS (For help: Click 'Contact Us' in your desk top, click here or call 1-800-738-8377 for Reuters Products and 1-888-463-3383 for Thomson products; For client training: training.americas@thomsonreuters.com ; +1 646-223-5546) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
HOUSTON, Sept 3 (Reuters) - Electric consumers in Texas' deregulated power market are enjoying 20-percent lower prices this summer despite searing heat that pushed power use to an all-time record in July.
Electricity is being offered for less than 10 cents per kilowatt-hour, down 20 percent from last summer in areas where electric retailers battle to attract customers, like Dallas and Houston.
'Competition has pushed down prices below those found in noncompetitive jurisdictions,' said Texas Public Utility Chairman Barry Smitherman.
Customers of municipal utilities -- such as San Antonio and Austin -- along with areas outside the state's primary grid, still pay set rates that are slow to change.
Nationally, falling power use by large industrial customers due to the recession and natural gas prices at 2002 levels have led to lower wholesale electricity prices and Texas retailers are passing along the savings to their customers.
Since being purchased by NRG Energy in May, Houston-based Reliant Energy has cut its power prices twice.
In late July, TXU Energy, the state's largest retailer, trimmed its prices to the lowest level since 2005. Many of the state's two dozen active retailers have taken similar action.
Gas, which started 2009 above $5 per million British thermal units, has tumbled to less than $3, below the average cost in 2002, the year Texas moved to competition.
'It's clear that the market has responded to lower wholesale prices which are reflective of gas prices,' said John Fainter, president of the Association of Electric Cos of Texas (AECT), an industry group with regulated and unregulated members.
Gas is the dominant fuel used to generate power in Texas and wholesale power prices closely track moves in gas.
The Texas market -- which eliminated regulated rates for 22 million customers -- has been praised by the industry but was blasted by politicians and consumer advocates as customers bore the brunt of rising market-based prices when gas hit $14 after Hurricane Katrina in 2005 and $12 in 2008.
'Last year, a customer on a variable-rate plan probably noticed rate increases in 30 to 60 days,' said Terry Hadley, a PUC spokesman. 'By the same token, those rates have come down faster. In the competitive market, things happen quicker.'
Since Texas households use twice as much power as the national average to run air conditioners in the summer, bills are likely to exceed $200-$300 in the hottest months of the year.
Compared to 2008, however, Texans have more and cheaper electric plans to choose from. Prices for one-year, fixed-rate plans have dropped 24 percent to an average of 11.4 cents per kWh, said AECT.
Smitherman also credits abundant Texas wind generation for keeping pressure on wholesale power prices. Texas leads the nation with more than 8,100 megawatts of wind capacity.
In 2008, summer power prices spiked due to gas and increased grid congestion blamed on dozens of new wind farms.
'We are likely to be in for a period of sustained low prices as gas prices stay low and we continue to build transmission to relieve more congestion and add more wind to the mix,' Smitherman said.
(Editing by Christian Wiessner)
((eileen.ogrady@thomsonreuters.com; +1 713 210 8522; Reuters Messaging: eileen.ogrady.reuters.com@reuters.net)) Keywords: UTILITIES TEXAS (For help: Click 'Contact Us' in your desk top, click here or call 1-800-738-8377 for Reuters Products and 1-888-463-3383 for Thomson products; For client training: training.americas@thomsonreuters.com ; +1 646-223-5546) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.