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Should States Pull the Plug on Energy Deregulation

September 14, 2010

The recent debacles related to electricity and energy that California and other states have experienced in recent years, a lot of detractors have voiced out their concerns about the effectiveness of energy deregulation. Many legislators from various states have even called the program a failure, making many states rethink their stand on whether to push through with deregulation, while other remain in a wait and see mode. Many pointed out that energy deregulation was not successful in lowering down electricity rates, while others argued that reliable electricity infrastructures failed to materialize in their states. Legislators in these states are voicing out their views that the government takes back control of the market, and contemplating in giving back monopolies their previous role of solely providing electricity generation and distribution facilities. Even in the state of Texas, which is at the forefront of the program with a deregulated Texas electricity market, consumers are paying more now than they used to at prices that are less than the national average. But those in the know are aware that the increase in prices should not be attributed to the implementation of energy deregulation but on other external factors as well. In fact, the state has gained much more from the Texas electricity deregulated market, with consumers doing well despite the volatile situation of the energy market. Energy Deregulation in Texas The deregulation of Texas electricity has given residents and enterprises the Power to Choose their retail electric providers. The original goal for the state was not only to gain cutbacks in the Texas electricity monthly rates but to open an energy market where the money, creativity and competition freely flow for the benefit of the state and its constituents – and that’s what happened in Texas. Texas energy deregulation have triggered an influx of investors that poured in over $36 billion to fund the building of new power plants in the state which is considered one of the largest consumer of electricity in the nation. The result was six times more capacity for electricity generation in the state than it ever did during the 1990s. Money and investments does not flow like that in a regulated or monopoly-controlled energy market. On top of that, the deregulated Texas electricity market offered great opportunities for more investors to come in, plus giving entrepreneurs and small business owners in the state new opportunities for earning money through the Texas electric retail market. Energy deregulation also paved the way for the development of more efficient and renewable energy, giving one step further in finally developing really cheap electricity for everyone to enjoy. Texas is the nationwide leader for wind energy with more than 2,000 wind turbines generating 9,000 MW of Texas electricity. Production continues to grow as the cost decreases with the development of more efficient wind turbine technology. Solar energy development has also started to take shape, which could generate 123,000 new jobs in the state as the state heads toward solar power panel manufacturing and installation more aggressively. This development is expected to generate at least 1000 MW of Texas electricity by the year 2015, and jump up to 5,000 MW by 2025. Could all these have occurred in a regulated or monopolized Texas electric market? The plain answer is definitely no and the more than 5.2 million Texas households and the scores of businesses using competitive energy attest to this. Other states should follow and benchmark the Texas example and finally gain success in their energy deregulation programs as they should have done so right from the very beginning.

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