60% of Texas households are overpaying
When the Texas electricity market was deregulated in 1999, the idea was to make power cheaper for Texans. New providers could enter the market to create more competition and more competition would lead to lower electricity rates.
Before deregulation, people got their electricity from the incumbent utility. Now, 20 years later, people can choose between approximately 40 different providers and hundreds of electricity plans. It’s fair to say that the government succeeded in creating more competition, and if you do your homework, it's also possible to find a competitive rate. Unfortunately, there’s still a large group of people that has never switched providers or hasn't switched for years and are overpaying for their electricity.
Deregulation did half the job...
Even though 85% of Texans have a choice in energy providers, many people don’t pay much attention to their electricity contracts. As a result, they’re paying more than they should.
Who is overpaying for their electricity?
According to our latest customer survey, 40% of the residents in 10 different cities has never switched providers and 60% of the respondents hasn’t switched in the last 3 years.
There’s a good chance that this group is overpaying for their electricity because providers tend to charge the highest rates to their most loyal customers. Electricity providers lure in new customers with attractive rates, gifts or discounts and count on these customers to do nothing when the initial contract expires. These customers automatically switch to month-to-month plans with usually higher rates so the provider can recoup their initial investment.
A lot of people don't scrutinize their electricity bills, and assume that once they’ve switched to a better rate that they’re good to go for a long time. Unfortunately, this isn’t the case.
Teaser rates and complex rate structures
For those who dare to dive into the world of electricity plans, they quickly discover how difficult it is to comb through the numerous plans and compare offers. One of the biggest challenges is understanding the estimated annual cost of an offer. Sometimes a plan looks attractive on paper, but could turn out to be very costly due to minimum usage penalties or significantly higher rates if your usage falls below or above the average. Please check out the video below to know more about how teaser rates work.
All in all, deregulation in Texas has led to more competition and it's possible to find a good electricity deal as long as you do your homework and are careful about picking the right plan. A large group of people find the process too complex and time-consuming and end up doing nothing. For these people, deregulation did half the job.