The Sneaky Reason You May Be Over-Paying on Your Electric Bill

NEW YORK (MainStreet)—The deregulation of electricity in states such as Texas, Pennsylvania and New York has often led to consumers paying higher prices.

Many consumer advocacy and non-partisan groups such as the AARP argue that deregulation has resulted in higher rates and has not benefitted consumers.

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"Deregulation is not working," said Janee Briesemeister, a senior legislative representative for the AARP. "Consumers have been promised that deregulation would bring lower rates than regulated monopolies. Overall, it has not benefitted consumers as it was promised."

R.A. Dyer, policy analyst for Texas Coalition for Affordable Power, a consumer advocacy group, said that while there have been some improvements in the short term, prices should be lower and contracts needs to be more transparent.

"We are still not where we should be," he said. "Folks are still paying too much for electricity."

In Texas, 85% of the state has been deregulated since 2002. Cities such as San Antonio and Austin have municipally owned utilities.

As of June 2012, consumers paid an average rate of 13.6 per Kwh in deregulated states compared to 11.7 in regulated states, Dyer said. In 2010, the average price in Texas in deregulated areas was 12.8 cents compared to 10 cents in Texas cities without deregulation.

"What we found consistently is that prices are higher in areas of Texas with deregulation — up to 40% higher — as compared to areas without it," he said. "Before deregulation, Texas had many years where rates were below the national average. Now our average rate is a little below the national average."

The retail electricity market is "very complicated and not straightforward," Dyer said.

"Our organization does not advocate reregulation, but we want to make the deregulated system as effective as it can be," he said. "It has been a difficult road. Deregulation is a challenge when it comes to electricity market. It has to be continually improved upon and there is potential for abuse and problems.."