Electricity Rates May Shoot Up This Summer Due to Shortage of Reserves

Electricity Rates May Shoot Up This Summer Due to Shortage of Reserves

The folks from ERCOT warned state legislators recently that another extreme summer could tax the grid beyond the current electricity power reserves.

According to H.B. “Trip” Doggett, president and CEO of ERCOT, the conservation effort put forth by Texans last year was great, but more would be needed this summer to survive without facing rotating outages.

Legislators are looking at the state’s electricity market to find ways to keep lights on in Texas during peak demand periods. An assortment of issues contributes to the problem, including surging population growth, regulatory influences on the power industry, low natural gas prices that discourage new power plants and difficulties in borrowing money to build them. Texas faces “a serious problem,” State Affairs Chairman Byron Cook, R-Corsicana, said after 13 experts spoke to his committee.

“It looks like we’re going to really have to embrace conservation because we don’t have the extra generation,” Cook said.

The state’s energy reserves this summer are projected to be lower than last year. The current reserve capacity of 13.75 percent is expected to drop “significantly below” that threshold in coming years, Doggett told lawmakers. Texas had a 17 percent reserve generating capacity during last summer’s scorching heat.

As blogged about in previous entries electricity rates have never been lower. However, given the shortage of generation, higher electric rates are inevitable this summer. Last summer, wholesale electric rates routinely hit the equivalent of $3 per kilowatt-hour (which is the cap on wholesale prices), while the lowest retail electric rates are currently 8 or 9 cents per kilowatt-hour.

You can avoid a price hike this summer by shopping around for a low electricity rate plan for your business now. By partnering with a reputable electricity broker, you can start saving on your monthly bills. At Live Energy, we keep our finger on the market’s pulse—locking in a low rate with the right electricity provider has never been easier. For more information on how we can help you find the right electricity plan for your business, contact us at (877) 810-7770 today.





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