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Retail Choice Rides Again: A Mixed Market in The Lone Star State

Texas wins raves from the big players for its rules and systems, but the small consumer, as in other states, sees little reason to switch.
Fortnightly Magazine - July 15 2002

law, prior to S.B. 7, allowed dual- and sometimes triple-certified areas.

"I think we've learned [that] if you can keep your price differentials within about 10 percent and your satisfaction levels quite high, your customers will stay with you, except for maybe the very, very large customers who are pretty much shopping on price," Chambers says.

Lack of noticeable savings and comfort with their long-time electric power provider may keep residential and small commercial customers from warming up to choice across the nation.

"You'll have a group of customers who don't like their utility or they just like the option of having choice," Briesemeister explains. "They'll see three or four dollars being worth it and they'll switch."

But then there's a larger group of customers, she says, who will think, "Three or four dollars, that's not a whole lot of money. Why don't I wait to see how this goes first." For these customers, they'll eventually hear stories about the person in the Texas market who didn't get a bill for several months. "They tried to switch companies, but it took ERCOT two or three months to get them switched," Briesemeister says. "Those are the stories that will confirm for consumers that they were right to be skeptical and to sit out the market. Then you get this cycle that they don't want to test the market, they don't switch, and then why will companies want to come here if customers don't want to switch?"

Perlman admits it will take customer education to get the switching numbers higher, particularly on the mass-market residential side. "Electricity is not something people think about every day," he says.

In the coming years, in both Texas and Illinois, retail suppliers hope that the regulated default price will give them enough headroom to get customers thinking about how much they could save by making a choice.

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