It’s the wrong time of year to be talking about heat in Texas, and yet, heat is exactly what ERCOT (the Electric Reliability Council of Texas) is feeling right now. For the past several months, there has been much discussion about the stability of Texas’ deregulated energy market. Of specific concern is capacity—does the Lone Star State have enough residential and commercial electricity production (power plants) to meet demand in the next few years.
A substantial heat wave, like the one we experienced in 2011, could be disastrous at our current productivity limits. In August of 2012, the PUC (Public Utility Commission), working with ERCOT, raised the price of wholesale electricity by 50%, from $3,000 per megawatt hour to $4,500 per megawatt hour. The higher wholesale electricity prices are meant to entice generators to build new plants in Texas, but we don’t know yet if the regulatory change will bring about the desired effect. There are certainly critics out there who feel it won’t.
Public Citizen, a consumer advocacy group based in Austin, released a study last week concluding “that paying electricity generators to add capacity is not the solution to meeting the state’s growing demand for power.” The study compared the effectiveness of “energy-only markets” and “capacity markets”—the model that ERCOT is currently exploring by attempting to lure new generation via higher prices for wholesale power. As reported by the Fort Worth Star-Telegram, their projections are not encouraging:
“We’d be better off developing a new market structure that creates incentives for people to use less electricity,” said Tom “Smitty” Smith, director of Public Citizen’s Texas office.
Furthermore, according to the same article, Public Citizen’s study is “the second in a week to criticize a capacity market in ERCOT.” The summer of 2013 is shaping up to be a real test of the stability of the commercial electricity market in Texas.
However, we encourage business owners not to panic. Such studies are merely projections of what will and won’t work. They are not indicative of an unavoidable shortfall. The market is stable at this time. Indeed, now is not the time for alarm—now is the time to plan.
Here at Live Energy, helping business owners develop and implement solid business electricity strategies is what we do. The commercial electricity market is unpredictable at best. The only way to keep your energy costs low year to year is to think ahead, and we have the expertise and experience to help you do just that.
Our team of professionals can walk you through the process of comparing electricity rates and electricity providers, helping you find the provider, contract, rate and term that will fit your business best. What’s more, we work with clients all across the country. While we are based in Texas, we’re familiar with all deregulated markets and can help you develop a business electricity plan regardless of your location. In our 10 plus years of service, we’ve helped clients of all shapes and sizes.
The commercial electricity market is always changing. The only way to ensure a low business electricity rate is to stay ahead of the curve, and that’s what we help our clients do. Call us today at 888-341-9155 to find out more about how we can help you.
