XENERGY Finds Texas ‘King’ of Retail Markets

Research recently released by energy consulting firm XENERGY indicates that electric deregulation in Texas has resulted in “major benefits for providers and customers.”

According to XENERGY’s research on the Texas market:

  • Competitors are making money. The affiliated retail electric providers (REPs) of the host local distribution companies are making money on their assigned customers, and are doing all they can to keep them.
  • Customers are saving money. There is a 6 percent 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 percent are available.
  • Direct contact is the preferred method of signing 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, according to XENERGY’s research. Not surprisingly, customers need an extra incentive to switch away from the affiliated REPs. And while REPs are offering higher margin, value-added products, most customers are not willing to purchase them.

“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.”

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