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.