Is deregulation good or bad for the state of Texas?

  This topic has various opinions.  Some think it creates competition and others think it makes the price even worse then when it is regulated by the government.  When Texas deregulated the electric market in 2002 the rates immediately began to rise.  Why is this?  I believe the 50 retail providers that started up in the wake of competition simply made there price right below the inflated price to beat.  They weren’t really pricing based on the market but instead pricing below an already inflated price to beat rate.  Natural gas prices steadily rose as well during this period since 2002 and as they rose so did the rates.

  Come January 1st 2006 the price to beat will be done away with and it will be all out competition among the 50 retail providers currently serving the Texas market.  I believe TXU, First Choice, Reliant, Direct Energy, and the rest of the incumbants will start to undercut the competition and price very low.  When this happens you will see the rate ssteadily come down.  Many of the retail providers in the market will be priced out of business as they will not be able to compete.  Many of the retail providers have very sloppy business practices and when the larger companies price lower then they are used to they will be forced out.  This low pricing will not last very long and what you will see is a rate based primarily on what the market is doing.  If natural gas prices go down you will see a very good rate.  If they go up and the heat factor remains steady you will see rates go up.

  Texas will do ok when the price to beat is no longer and the Retail Providers who stick around formulate themselves into a competitive force.  Until this time which will take about 2 years you will see some interesting phenomenons with the electricity rates in Texas.  Just be sure to lock in while it is low.  It should be all over the board.

Electricity bites us all doesn’t it?

   Electricity is the sun and we pay dearly for it.  It is convenient and the world is built on it and lives by it.  We do what we do today mainly because of electricity.  The world evolved into a supplicating without thought quibbling fool for energy. 

   Things have come along way.  We now have a world that has seen the face of competition in this regulated industry but a small shaving off the retail price hasn’t flattered anybody.  Company electric service customers want more from competition.  Software analysis, aggregation, peak demand, load factor considerations, infrastructure changes and a host of other options can assist where the electric company has no incentive to notify the business about.

   Energy software abounds in the realm of risk factor assessments, energy portfolio management and energy block buying.  The standard product offering by electricity providers is a fixed rate product for your load factor.  This is just option pricing but it appears to be tailored to your company but it isn’t as tailored as you might be led to believe.

   With the correct software, energy manager, or energy consultant you can buy the right amount of electricity you need on the commodities market in standard blocks.  For some companies this seems like something too far away from their needs but it’s much simpler then it may look at first glance.  For instance Texas has ERCOT which oversees the Deregulated industry.  If for any reason something goes wrong in the system you still receive your power.  This is a safe guard so Texas companies can feel safe while they look for competitive electricity rates.  A simple call to an energy broker or aggregator is all a company needs to participate in buying commodity priced electricity without the large retail margin.  Many supposed energy brokers and aggregators are nothing more then fly by night Enron salesmen, so buyer beware.  You want to look at their website and see exactly how they do business.  They should be licensed by the state to aggregate companies together.  They should also have the tools to buy commodity energy blocks that can be used on a 24 x 7 time frame.  Risk management is the key to a good energy broker and aggregator.  These energy consultants can add hundred’s of thousand’s and occasionally millions to your bottom line. 

•  In Summary: Call an energy broker after reviewing their site.
• Find out if they can buy the energy in commodity blocks.
• Ask them if they have a pool of providers to buy from.
• See their risk management strategy and its track record.
• Be involved in the process.
• Finally Ask for references.

Energy software, pricing and block commodity buying

When pricing comes in providers and aggregators face the challenge of sending it fast and accurately.  Having the right software can insure you get this information to all your customers fast and effectively.  For customers, dealing with a company who uses the latest software means they can provide to you the most updated prices available in the market with the smallest retail margins.

Pricing can actually get pretty complex but the more complex it is the greater the companies rate goes down.   A tailor made price has so many factors taken into consideration the aggregator or provider is able to err on the side of a cheap rate.

The right software allows a company to respond immediately to a customers request for a tailor made price for their company.  Key reports, forecasted usage, supply, demand, flexible products, including fixed price, index price, collars, time-of-use, swing, spark spreads, and other market considerations are available for educating the customer.

Some of the largest gas and electric companies make use of this type of software and it is only reasonable that an aggregator, provider and customer make use of a money saving tool like this.

At this time we have two links to provide and recommend for this type of application although more will be added.
Pricing Expert by Lodestar
LoadVision by Nexus