(September 3, 2020)
Texas prides itself on its competitive retail energy market, but some observers are worried that free energy competition is gradually being eroded. The latest development fueling fear among consumer advocates was the recent news that NRG Energy plans to acquire Direct Energy, a major competitor, for $3.6 billion.
If the deal is approved by regulators, it would mean that NRG and Vistra Energy, the two largest retail energy providers in the state, would control approximately 75 percent of the deregulated retail energy marketplace. A decision is expected by the end of the year.
For the Texas Coalition for Affordable Power, an alliance of cities that buys retail power, the main problem with the consolidation of the market is that consumer prices will rise. “It is hard to claim that competition is vibrant if so much of the market will be controlled by just two firms,” argued Geoffrey Gay, general council for the Coalition.
Data reported by the Houston Chronicle appears to back up this view. The cheapest retail prices on the competitive marketplace are 6 percent higher this year than they were in 2019. While customers could get a plan for around 8.5 cents per kilowatt hour, the lowest prices have risen above 9 cents per kilowatt hour this year. Over the same period, NRG and Vistra have steadily been expanding their market share.