Several areas in Texas are about to be hit with a 20-30 percent increase in electric bills

[TX75007]

Originally Posted by KathrynAragon

Not sure how that relates to an actual increase in the rate, but let us hope the abundance of natural gas makes a positive difference in our bills.

There are two kinds of demand in TX. One is long term fixed price power. Most of that market is supplied by existing plants who have long term contracts. That market is hard to get into.

The second is peak demand, ie when its really cold or hot. It is this demand that places the grid in TX at risk. To meet it, more plants are needed.

The companies that own and build the generating plants incur a risk of not getting their investment back if the power demand is not there in the form of prices for their electricity.

No one wants to be the last one to build the next plant for fear that they will not get their investment back. And its a HUGE investment hundreds to billions of dollars. So no one will jump in to build the first one either.

The raising of the cap for peak wholesale rates reduces the risk of not getting the investment back and also incentivizes the plant owners to take the risk of owning the last plant to come onto the grid by allowing them to charge a higher marginal price for the power that they produce. Thus the POTENTIAL exists for them to get a higher price, but only if we have very high peak demand - and by then we would REALLY need the power.

Over the long term, as fixed demand grows, these new plants that are excess capacity today will become the long term fixed price generating capacity. The owners will change to providing fixed price power due to the better cash flow. And because most of them will be natural gas, which will be abundant for 20 years, and thus have lower operating costs than coal or nukes, the average cost will drop statewide.

The other thing is that more plants means more resiliency for the grid, too.

A lot of firms that use huge amounts of power do not have to buy from the grid. They can and often do put in their own generating plants. The low price of gas has made this attractive to some, taking their demands off the grid, thus reducing demand. This has helped prices at peak times, too. Some even sell back to the grid when demand is high and slow down operations.

The push for smart meters and attractive after-8pm pricing is one way providers are trying to get a handle on cost of peak power, too.

[TX75007]

Originally Posted by Austinite101

I like regulated energy better, but that argument is for another day.

That is the tangential argument here.

What you call regulated power is really a state-controlled monopoly for power production and distribution. This only benefits the suppliers who provide hardware and other services. There is zero incentive to improve things and lots of incentive to corruption and politicization.

Power production is heavily regulated in TX by the PUC, but that production is traded on a transparent, open market. It is no longer a state-controlled vertical monopoly. This has forced the producers and the distributors and consumers to become more efficient.

And as a result, TX has the lowest wholesale electricity prices in the nation, the highest amount of wind, and a highly reliable grid, even though it is growing.

[joycey1000]

I am just curious. I pay 0.29 cent per kWh in California. We only have one electric company. How much is the cost per kWh in Austin, Texas, anyone knows this?

[Austinite101]

Originally Posted by joycey1000

I am just curious. I pay 0.29 cent per kWh in California. We only have one electric company. How much is the cost per kWh in Austin, Texas, anyone knows this?

You pay .29 of a cent, or you pay $0.29 cents?

[Austinite101]

And Austin has tiered rates, so you will pay a lower rate if you use less, until you hit a certain point and so on.

[rynetwo]

Originally Posted by joycey1000

I am just curious. I pay 0.29 cent per kWh in California. We only have one electric company. How much is the cost per kWh in Austin, Texas, anyone knows this?

The CPS of San Antonio for Commerical rate only...

$ 0.0695 Per KWH for the first 1600 KWH*
$ 0.0325 Per KWH for all additional KWH

For residential rates
$ 8.25 Service Availability Charge
Energy Charge
$ 0.06680 Per KWH for all KWH
Peak Capacity Charge*
$ 0.0175 Per KWH for all KWH in excess of 600 KWH
*Peak Capacity Charge is applicable only during the summer billing period (June - September).

http://www.cpsenergy.com/Residential...ates/index.asp