Texas Energy Deregulation: Is it working?By admin • January 29th, 2009Texas deregulated it’s electricity markets in January 2002. Since then there have been questions as to whether it was actually working or not. For the most part it seems, that people were questioning the efficiency of the markets because the rates in some areas of Texas were higher than others. It was cited that some areas of Texas use natural gas as the basic energy to create electricity. In 2002 as you can see from this chart of natural gas prices [Gas price chart], gas prices began spiking upwards in or about 2002. This led many Texas deregulation detractors to the conclusion that deregulation wasn’t working for Texas.Keep in mind that Texas is a large state with a diverse and capable economy. It for instance houses something like 50+ of the Fortune 500 companies. Texas is a very competitive state. If Texas deregulation was not “working”, it would show up in sustained larger than normal profits for the electric industry as a whole. No one has yet, to my knowledge, made this assertion. There may be some truth in this at the moment. But the business cycle dictates that where “opportunities exist” in a marketplace, it will soon be over run with “profit seeking” companies. But soon, there will indeed be too many companies involved in the said marketplace, and they will begin to leave. Leaving the stronger, more capable companies. In the end, there will be fewer companies, in this case, fewer electric companies and they will have the lions share of the business.As this happens, barriers to entry grow, and in the end, few companies could start-up and compete in this environment. In Texas we are probably still in the stage where companies are coming to the deregulated market. But, in time they will by their sheer numbers force the prices down as much as possible. In the end, Texas ends up with strong reliable companies, that have built reputations and trust in their respective communities. Barriers to entry will be high, and the margins of profit small.If and when this happens, we can say that Texas has in fact benefitted from the PUC’s deregulation of electricity in Texas.Article created by http://cheaptexaselectricrates.comTo get a residential or small business electric quote Click HEREFor large commercial or industrial electricity users, let our electric energy consultant get you an auction with several electric companies. Click Here to contact an energy consultant.Share and Enjoy: