Electricity Prices Have Nowhere to Go But Up

On June 28, the Texas Public Utility Commission, the state agency that regulates energy, will likely vote on whether to sharply increase the top amount that electricity generators can charge retail providers such as Reliant and TXU for power when supplies run short. In other words, when we're all whimpering and cranking the AC. In other words: August, when the increase would take effect.

The change would raise the price cap from $3,000 per megawatt hour to $4,500, increasing costs for retail providers when the grid gets taxed. Supporters insist that allowing power generators to charge more will encourage them to build more plants, thus saving the lights from going dim in the future.

Opponents ask: Why so much, and why so soon?

And Buzz, being Buzz, asks: How much is this gonna cost me?

The answer: a lot. The Texas Industrial Energy Consumers, a lobbying group, offered the PUC some comments on the price-cap. The group noted that, based on 2010 and 2011 consumption, raising the cap to $4,500 would have added around $4.5 billion per year to wholesale electricity costs. Doubling it again would generate an additional $13-plus billion in revenue for power generators.

Those costs would obviously be passed on to consumers. How much? It's unclear. Last summer brought record-setting heat, and comparing electricity use among homes, businesses and industry is an apple-orange kind of thing, so it's hard to say just how high our bills could go. But look: $4.5 billion is a whole freakin' lot of dough, and you can bet the retailers aren't eating all those new costs.

State Representative Rafael Anchia is one of a handful of legislators who filed questions with state regulators about the rule change. He wants to see some evidence that the PUC is looking at all options to make sure Texas has adequate electricity and that consumers aren't getting sodomized in the wallet.

"I want to make sure we use all the tools in the toolbox," Anchia says, including voluntary conservation and more efficient construction, which could reduce the need for new power plants. "We want to send price signals, I get that. Now, what are the right measures? What are the right signals? That's what I'm trying to arrive at."

It's complicated, of course, and the PUC will be looking at a whole host of pricing systems and triggers in the months ahead. One thing is certain -- life doesn't get cheaper.

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Patrick Williams is editor-in-chief of the Dallas Observer.
Contact: Patrick Williams