Texas is the largest electricity market in the country and incredibly ranks 11th in the world when it comes to consumption. For years the politicians in the Lone Star State had been be arguing about a solution to rising energy costs for homes and businesses. Then in 2002, the Texas Senate passed a law that called for electricity deregulation.

What this does is allow customers in the state of Texas to choose their electricity service provider. In the beginning this new law brought excitement and change to each city, and about 85% of the commercial customers switched their providers at least once. Then of course residential changes hit around 40%. These are quite astounding numbers, and it’s hard to believe it took this long to make the change.

The early evidence was auspicious as a number of new firms entered the market. It appeared as if the increased competition from deregulation would lower prices. In the two years after deregulation, more than 60 startup firms entered the Texas electricity market. These new firms served both residential and commercial areas.

The problem was it didn’t work like most people believed. In fact, it completely went in the opposite direction raising prices over 40%. This occurred during a 3 year span between 2002 and 2004. This left consumers in the state feeling mistreated.

Due to all the dismay, proponents of deregulation tried to explain the situation as best they can. The first answer revolved around natural gas. After all, during the same time these prices increased by nearly 60%. The way they figured it was that it was still going to save Texans money in the long run.

Then of course they had to deal with the biggest issues consumers were complaining about; the lack of immediate savings. It left the majority of the state feeling skeptical about what was really going on. It looked like we were all being sold a false bill by politicians and legislators.

In the end, supporters and economists ended up being right. When the natural gas industry started to decline and stabilized, the electricity bills around the state began to decrease. This revelation eventually brought about a decrease of 30% by the summer of 2008 through the winter of 2009.

Many experts attribute this to the glut of natural gas in the state coupled with decreased energy demand due to the recession. Though Texas residents still have their fingers’ crossed, many in the know expect prices to continue to fall as the recession intensifies and people use less natural gas.

It’s an up and down battle that will continue to be monitored throughout. However, for businesses owners it has become a huge help. Since many of them have to cut prices during these economic times, the lower electricity costs have kept their businesses afloat. Definitely an advantage for commercial companies anyways.

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