In August, the Price Cap on Electricity in Texas Will Jump 50 Percent

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Texas electricity regulators voted today to raise the price cap on wholesale electricity from $3,000 to $4,500 per megawatt hour -- the equivalent of powering roughly 330 homes for one hour -- by Aug. 1. It's only June and already the electrical grid is being tested by record peak demand, prompting calls for conservation.

Regulators are betting that the stuffing-cash-in-generators'-pockets approach will encourage them to build new power plants so rolling blackouts don't become a Texas summer tradition, like bitching about how hot it is. One of the PUC commissioners, Ken Anderson, abstained from voting on the rate hike. He's spoken with Unfair Park before, and told us he basically thought doing it this summer was a terrible idea. For starters, he bets we'll eke by this summer without shedding load, which is the electricity-nerd speak for cutting your power off.

What's more, given the spread between cheap natural gas prices and soaring wholesale electricity prices, gas-fired power plants will need Mack trucks to haul all the cash they rake in this summer. New power plants, on the other hand, wouldn't even come on line for several years at the earliest.

There's another side-effect to the commission's decision today. You've probably already signed a contract with retail electricity providers like TXU Energy or Green Mountain for example, for a certain term and at a certain price. Two things will happen: A) They're going to eat the difference, or B) They're going to pass it on down to you. TXU Energy, in a filing with the commission, has already said the rate hike gives it the right to break fixed-rate contracts.

We get why Anderson abstained -- generators get paid for some theoretical plants they may or may not build in the future, and we get hosed.


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Paul
Paul

Why does everyone continue to be deluded in the fantasy that electric power deregulation was supposed to be good for consumers? Doesn't anyone remember when the PUC kicked everyone off of the rate base plans?

Notamathgenius
Notamathgenius

Somebody needs to check their math. 1 megawatt hour = 1000 kilowatt hour. My electric rate is $.085/ kilowatt hour or $8.50 / megawatt hour. That's a lot less than $3000.

A-nony-mouse
A-nony-mouse

All those ideas would be reasonable to insist on and might actually work in getting new power plants built. So there is no way that the PUC, ERCOT or the Generation companies would ever allow them to see the light of day.

JD
JD

This doesn’t have to be all bad. The trick is to incent the generation companies to build additional capacity, right? Suppose we tack on a couple of conditions to firms eligible for the increased cap. Something like:   The only generation companies eligible for the increased price cap are those companies that have (an) additional generation project(s) under construction that are on time on the project timeline. That should get some dirt flying.   Generation companies that fail to bring said project online are subject to clawback provisions. That should keep the dirt flying to completion.   Generation companies that retire capacity are ineligible for the increased cap to the extent that retired capacity exceeds new construction. No swapping capacity in order to be eligible for the big bucks – we need more capacity.   Generation companies that remove capacity during peak load are ineligible for the increased cap during such time as their capacity is impaired. That should keep them from gaming the system.   We need these guys as much as they need our money. It is HOT in August! It just seems that their negotiators are much better than our negotiators. I’m sure that smarter folks out there could polish this up. Right?

Anon
Anon

It doesn't actually bother me as a matter of what I spend on electricity. My credit card automatically pays it, and I don't bother checking anymore because I don't really care. It bugs me more as a matter of poor public policy. If your price setting fuel stock plummets and your rate goes up, there are no market forces at work.

CrumDay4Taxpyr
CrumDay4Taxpyr

 Thank You. I needed to be anal raped after the city of dallas anal raped me to fix levies to build a private roadway, I needed some bananas shoved in my ass.  So thank you regulators, and why abstain just vote NO, don't be a v@$!%!

Chiggers!
Chiggers!

Natural Gas prices up? Regulations? *pish and tosh* Well, we've got to base consumer prices on the highest potential price we may (or may not) pay for our energy source to generate this power, nevermind that we're producing it with coal. Natural Gas prices down? Squeal!!!!!! Please, regulate us! REGULATE US!!!!!!!

lorlee
lorlee

And yet people keep voting for the people who appoint these shills.  as a result, you get the government you deserve

Anon
Anon

I predict that not a single power plant will be built as a result of this. I'd place lots of money on that outcome, as a matter of fact.

Montemalone
Montemalone

 After you pay your electric bill, you won't have any money to put on it.

HEY YOU, IN THE BACK
HEY YOU, IN THE BACK

 It's probably too derogatory to use a photo of John Q Public takin it up the ass.

Brenda Marks
Brenda Marks

This is horrible decision for consumers. And completely unnecessary.  Big companies will negotiate their own rates down.  Consumers will get fracked (my new favorite word).  And I'm betting now no new plants will be built.  This is to pay off TXU bond holders and KKR.

Brian Edmison
Brian Edmison

Yeah, that headline is wrong... I'll explain if you want (or if it's not completely obvious from the first sentence of the story).

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