Deregulation of the Texas electricity market

And residents in the deregulated market pay prices that are considerably higher than those who live in parts of the state that are still regulated.

According to a typical economic theory, prices are optimally determined in a fair and transparent market, and not by a political or academic body.

[6] In order to prompt entry into the market, the price to beat would have to be high enough to allow for a modest profit by new entrants.

Between 2002 and 2014 the total cost to Texas consumers is estimated to be $24 billion, an average of $5,100 per household more than comparable markets under state regulation.

[9] As a result, Texans who pay wholesale prices such as with retailer Griddy received exceptionally expensive electric bills as high as $450 for one day of use.

Due to the small difference in competing prices and slow (yearly or so) "buying" process, price decrease due to competition was very slow, and it took a few years to offset the original increase by "traditional" electric providers and move to lower rates.

In 2002, residential customers in the Dallas-Fort Worth area could choose between 10 retail electric providers offering 11 price plans.

With the ability to invest profits to satisfy further energy demand, producers like TXU proposed eleven new coal-fired power plants in 2006.

When the private equity firms Kohlberg Kravis Roberts and the Texas Pacific Group announced the take-over of TXU, the company, which was known for charging the highest rates in the state and was losing customers, called off plans for eight of the coal plants.

The profitable and growing Texas electricity market has drawn considerable investment by wind power companies.

This would permit energy customers to save money by further tailoring their consumption based on whether it occurred during the peak demand period (high cost/high pollution) or the off-peak (night time).

[15] Due to the increased usage of natural gas immediately after deregulation, new-era energy tools such as wind power and smart-grid technology were greatly aided.