One of the benchmarks of a successful free market is the range of choice provided to customers. Choice can be viewed both in terms of the number of firms active in the market as well as the variety of products those firms offer to consumers. In the first decade of retail electric deregulation in Texas, the market has experienced dramatic changes in both metrics. There has been a proliferation of Texas Retail Electric offers in the market.
Electricity Providers and Plans
|EOY 2002||EOY 2012|
|REPs Serving Residential Customers||Number Of Products Offered||REPs Serving Residential Customers||Number Of Products Offered|
|AEP TCC (CPL)||7||8||44||251|
|AEP TNC (WTU)||3||3||40||234|
Sources: Scope of Competition in Electric Markets in Texas, Public Utility Comissions of Texas, Jan 2003 and Jan 2013
The interesting element in the table above is that the growth in the number of residential electricity providers, while impressive, is dwarfed by the growth in the proliferation of Texas Retail Electric offers. In the first year of Texas retail electric competition, the ratio of products to suppliers was essentially 1:1. Ten years later in 2012, the ratio was almost 6:1. This reflects a classic free market response to consumer demand and competition.
While there will always be a demand for a low price, no frills 12-month fixed term product, it is difficult to get noticed in an increasingly crowded market without offering a more diverse array of products. The coming years will be to interesting to monitor to see if supplier consolidation and streamlining of product lines occur and change the competitive landscape.
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