Texas Electricity Provider Market Share. As Texas retail electric competition enters its 14th year, the market continues to mature as evidenced by the number of market participants and the diversity of their electric plans. Even with merger and acquisition activity, the number of retail electric providers serving Texas customers continues to grow. Several factors have contributed to this increase including the standardization of credit support and preferred supplier agreements that reduce barriers to market entry and growth. The market is also friendly to smaller retailers with low overhead costs and niche marketing strategies.
The impact of increased competition on market share is difficult to analyze. Several entities gather data on retail electric supplier market share. DNV GL publishes a proprietary report for its clients and subscribers but the analysis relies heavily on voluntary reporting by retail electric providers. The Department of Energy also collects data on sales volumes and customer counts from retail electric providers. DOE uses this data for analytical purposes only and does not disclose it to the public other than in aggregate form.
Oncor Plans
Centerpoint Plans (CNP or Reliant)
AEP North Plans (AEPN)
AEP Central/West Plans (AWPC)
Texas New Mexico Plans (TNMP)
Market Share Proxy Data
In Texas, however, there is a proxy measurement of market share that can be obtained from ERCOT. ERCOT’s annual report on the renewable energy credit (REC) trading program provides a delayed view of how much competitive electric load each retail energy provider serves in a given year. As the grid operator in Texas, ERCOT has data on all competitive energy sales. It uses this data to determine how many RECs each electric retail provider must retire to comply with the Renewable Portfolio Standard. Confidentiality of the information expires the year after the REC assessment. For example, 2012 data appeared in the 2013 report that was published in May 2014. It is important to note that the data are based on energy volume rather than customer count. Retailers focused on commercial and industrial customer segments are favored in this approach.
To get a picture of how the market has changed over the years, REC requirements for non-ERCOT entities (Entergy, SPS, SWEPCO, and El Paso Electric) were excluded from the analysis. Data was aggregated for retail providers operating under multiple brand names. The data from 2003, 2008 and 2012 reveal interesting trends in the competitive retail market.
In 2003, the top ten retail electric providers represented more than 87% of retail electric sales. In addition to incumbent electricity providers such as Reliant, TXU, First Choice, and Direct Energy, entities like Tenaska, Dynegy, and Calpine figured prominently in the top ten. This was early in the history of Texas electric deregulation. Residential and most commercial customers could still rely on the default “price-to-beat” offered by incumbent electricity providers. Therefore, the concentration of marketing efforts was to large commercial and industrial customers.
Customers Favor Larger Providers
Moving on to 2008, the top ten retail electric providers accounted for approximately 84% of all retail electric sales volumes. While the concentration of market power diminished only slightly from 2003, the composition of the top ten providers changed more significantly. While some large commercial and industrial specialists like Constellation, Suez and Sempra were in the top ten, the group favored retail providers with broader marketing strategies. Competitors like Gexa and Stream Energy joined the incumbent electric retailers to round out the list.
In 2012, market concentration of the top ten retail electric providers dropped to around 79%. Just Energy, through its organic growth and acquisition of Hudson Energy, Tara Energy, and Amigo Energy entered top ten. Otherwise, the composition was similar to 2008 in that it favored retail providers with broad marketing strategies.
One of the most interesting trends has been the decline in market share by Reliant and TXU. In 2003, their combined market share was close to 70%. By 2008, it had declined to just over 50% and it continued to decline to near 40% by 2012. The market share of the top ten providers only declined by approximately 5% during that same period. Therefore, while the largest two retail electric providers undoubtedly lost market share to smaller firms, large competitors captured most of their lost market share. The trend has been for greater diversification of load among retail providers but with most of the diversification being within the top ten providers. The impact of supplier diversification and M&A activity on the market will be interesting to observe over the next several years to see if these trends hold or reverse course.
Oncor Plans
Centerpoint Plans (CNP or Reliant)
AEP North Plans (AEPN)
AEP Central/West Plans (AWPC)
