The Big Electricity Question: How Much Are Dry Nuts Worth?

As Brantley pointed out yesterday, the Texas Public Utility Commission got down to hard numbers last week as it inched further toward what appears to be inevitable -- a huge increase in the current $3,000 per megawatt-hour cap on the price of wholesale electricity during times when demand is high. Texas needs more power, and power producers say they need more money to build the generation plants. Run it all through the magical mystery maze of the the electric market, with it's "peak" this and "base load" that and long time frames, and what we end up with is anybody's guess -- provided anybody's guess is "higher prices."

Unfair Park's commenters -- as cynical a bunch of SOBs who ever trawled the Internet -- continually express doubt that the big power companies won't just pocket any extra money and run. That's the problem with being cursed with a long memory. You pesky Unfair Parkers remember all the promises made and broken when Texas deregulated the electricity market a decade ago. Or sort of deregulated it ... still haven't figure out how price caps, the PUC and ERCOT figure into a "deregulated" scheme.

Still, the whole convoluted mess is fascinating to watch -- to wonks who are easily amused, anyhow -- like those old stereogram posters from the '90s. I stare and stare trying to make the 3D picture appear, one that will answer The Big Question about the future of Texas' electric market: Is my air conditioning going to go out this summer and leave me with a raging case of sweaty balls?

Well, fine, it's my Big Question. Is $9,000 per megawatt-hour the right price for peak electricity? Listen, just guarantee me a dry sack, and you can bill me later.

There was some good news out of the PUC, though. Last week, the commissioners knocked down a regulatory hurdle for Xtreme Power Inc., a Kyle-based company that this year plans to complete a high-tech batteries- and mass-storage facility linked to a Duke Energy wind farm out in West Texas.

Xtreme's facility will be able to store 36 megawatts captured from Duke's 153-megawatt Notrees wind farm in Ector and Winkler counties, then instantly release the energy when it's needed. The PUC, over the objection of some energy-intensive industries that themselves benefit by idling plants and selling power to the grid when demand is high, agreed to let the new big-ass battery's operators pay wholesale prices for the electricity it takes from the wind farm and stores, instead of higher retail prices.

Apparently, the opponents thought the storage plant should pay retail for electricity -- because, technically, all those batteries were consuming power from the grid -- then sell it back to the grid for wholesale, a way of doing business not generally accepted in most industries outside newspapers.

Storing power from wind and solar generators has been the bugbear for the renewable-energy industry, but Xtreme hopes its technology will smooth out power supplied by the fickle winds and make wind farms more economically feasible and efficient.

Granted, the storage project required $22 million in grant funding from the feds to help it get off the ground, but as Amanda Brown, director of regulatory affairs and marketing policy for Xtreme told us, "the PUC commissioners have definitely shown their commitment" to energy storage. (Xtreme also benefited from a $2 million investment from the state's often-criticized Texas Emerging Technology Fund, a.k.a Rick Perry's petty cash box.)

Now, some of you might be thinking that $22-$24 million is a pretty stiff gargle when it comes to helping hippie wind-power work. Me? As far as Buzz is concerned, a boxcar filled with government green is a small price to pay to have the boys cooled by the dry night winds of West Texas -- especially if I don't have to live there.

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