Research finds Texas ‘king’ of retail electric markets

BURLINGTON, Mass., April 4, 2002 — A new report from XENERGY reveals that electric deregulation in Texas has resulted in major benefits for both providers and customers launching Texas to the forefront of electric retail choice.

Significant top line findings of the research include:
— Competitors are making money. The affiliated Retail Electric Providers (REPs) of the host local distribution companies (LDCs) are making money on their assigned customers, and are doing all they can to keep them.

— Customers are saving money. There is a 6% discount off of earlier rates for all but the largest customers. For those who have shopped, additional savings in the range of 10 to 30% are now available.

— Direct contact is more than ever the method to sign-up customers. A direct sales force is still the primary way to sign up large nonresidential customers. REPs are relying on direct contact including telemarketing, door-to-door, intercept, and multi-level marketing more than ever to sign-up mass-market customers.

— Customers, large and small, want assurances, simplicity, and savings. An “Enron Effect” is retarding customer shopping. Not surprisingly, customers need an extra incentive to switch away from the affiliated REPs. And while REPs are offering higher margin, valued added products, most consumers are not willing to purchase them, yet.

“The reasons for the initial success in Texas are a function of a variety of factors dealing with market design, competitor strategy and maturity, and the good fortune of low wholesale prices,” said Bruce Humphrey, XENERGY Vice President. “While the market is imperfect, there is good reason to believe that choice will continue to increase in all segments spurred on by substantial amounts of competition for customers.”

“There are profound lessons to be learned from the Texas market,” said Tom Michelman, senior professional, “in particular, the Public Utilities Commission of Texas (PUCT) jurisdiction over ERCOT, and their ability to coordinate wholesale and retail initiatives unlike any other market to date has been critical to the market’s success. However, what is occurring in Texas will have a far greater impact on national retail markets than simply providing lessons and a blueprint for similar success. Companies finding success in Texas now have a platform to expand into the other emerging retail markets.”

Since 1996, XENERGY has completed more than $10 million of customer, competitor and regulatory research, creating the industry’s most comprehensive source of information on retail energy markets for natural gas and electricity. Results are confidential and limited to the study’s sponsors, who have included more than 80 major utilities, marketers and other companies. For information on the Retail Energy Markets study, please contact Taff Tschamler at (720) 241-0157 or

XENERGY ( is an energy consulting, information technology and energy services firm headquartered in Burlington, Massachusetts, with offices across the United States and in Canada. The company offers consulting services on a wide range of energy issues, and works with utilities, energy service companies, industrial and commercial customers, institutions and government agencies. Founded in 1975, XENERGY is a wholly-owned subsidiary of KEMA Consulting.


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