Deregulation was supposed to provide cheaper energy options, but instead it’s caused residents to pay billions more.
Republican Texas lawmakers often tout their state leadership’s contempt and recalcitrance toward the federal government as a point of pride. But a new analysis by the Wall Street Journal (WSJ) has found that the deregulation and monopolization of the Texas energy market cost Texas residents $28 billion more than they would have paid under a traditional utility. When Texas changed from fully regulated power generation to the largely deregulated system that’s in place today, it began requiring almost 60 percent of residents to buy from retail utilities rather than a public local utility, says WSJ. Retail providers buy energy and then sell it at a fixed rate and essentially acting as a middleman. Texas isn’t the only state that allows its residents to choose between energy providers, but the model of energy system that led to last week’s power crisis is built upon a shaky framework. Ironically, the deregulatory effort was supposed to make power cheaper for consumers while avoiding federal oversight. When a Republican state senator who helped lead the charge for deregulation of Texas’s grid in the 1990s alongside lobbyists and businesses like Enron unveiled the deregulation bill in 1999, WSJ noted that he said: “If all consumers don’t benefit from this, we will have wasted our time and failed our constituency.
