Archive for June, 2012

Power shortage in Texas predicted for the next 10 years

According to a new report commissioned by the ERCOT (Electric Reliability Council of Texas), the state of Texas is likely to face power shortages for the next 10 years. Unless new power plants are set up to meet the growing demands, and improved economic incentives are offered to guarantee power reliability, Texans face a bleak future when it comes to meeting their electricity needs.

 

How power shortages can affect life

Power shortages are predicted to happen each year during the peak demand periods. A common instance could be a hot summer day or an extremely cold winter, when the demand of Texas electricity will be at its peak. So, this is likely to be the time when everybody’s power goes out as there won’t be enough electricity to meet the demands.

 

What gives rise to this situation?

In Texas, the demand for power has been principally driven by a robust economy and a 21% growth of population over the last decade, as per the U.S. Census figures. The power grid has been strained of late due to the extreme weather conditions, which in turn has made ERCOT notch up a few peak-use records during the last year.

 

Though Texas power producers added almost 25,000 megawatts of new gas and coal-fired plants over the last decade, they have halted most of the new plant construction as a result of rising power prices that don’t encourage new investment, and volatile economics.

 

From more than $4.00/mmBTU last year, natural gas prices have come down to $2.45/mmBTU. What’s more, next two years’ gas curve does not show any projected returns matching the last year’s levels.

 

To make matters worse, unlike the power markets of other states, ERCOT does not provide capacity payments to ensure the availability of generators, which could have been sent out during peak power usage periods. Since the Texas energy deregulation allows customers to shop around, procurers of power get discouraged to enter into long-term agreements of power purchase from wholesale generators like TCEH. So, it’s no wonder that ERCOT power producers, driven by low revenue visibility, are forced to rely on factors that are difficult to predict, like extreme weather conditions and fluctuations in the price of natural gas.

 

The EPA actions that prevent the set up of coal-fired power plants are also adding to the problem of power shortage. Though many experts talk about the ability of new coal technology to allow clean burning of cheap coal, thus meeting the rising demand for electricity without polluting the environment, the green activists and EPA are in no mood to oblige.

 

What the future beholds

From 13.75%,ERCOT’s reserve margin is forecasted to dip to 9.8% as early as 2014. By 2015, it is likely to slide down further to 6.9%. The situation is expected to become worse in later years, but laying down a clear picture is difficult at the moment. A primary concern for Texas electricity consumers is that very little new generation is planned between 2014 and 2016, which in turn will adversely affect the entire power scenario.

 

Conclusion

Unless well planned steps are taken to alleviate the potential risks, Texas electricity consumers stare at a long spell of power shortage.

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Higher Energy Prices sought by PUC to Protect against Blackouts

Texas electricity consumers should prepare to pay higher energy prices from this summer if a new policy under consideration is passed.

 

What the PUC proposes

Plagued by frequent blackouts and energy shortages in the past, especially during the months of summer, Public Utility Commission (PUC) of Texas has hinted at considering price rises to address the growing concern over Texas’s energy reserves. This state agency, which is in charge of overseeing the electricity market of Texas, signaled in April this year that it may opt for new rules to address the power problem. However, the PUC stood by the expected price rise which the new rules may trigger, as the excess money is set to support additional generation construction. This, the PUC believes, will not only solve the existing power problem, but also help secure the framework needed to meet requirements in the future.

 

Here’s an overview of some of the proposals set to be considered by the PUC:

  • Price cap set to increase: By August, the price cap in the wholesale energy market may be increased to $4,500 per MW/hour, which will be far higher than the present cap of $3,000.
  • More price cap rise in future:  During the forthcoming years, the PUC would consider increasing the cap further, and it may ultimately exceed $10,000. If this happens, the Texas price cap would become more than similar caps existent elsewhere in the US. What’s more, it could bring the state in line with Australia, where an extremely high cap of $12,500 MW/hour exists.

 

Impact of these proposals

Though PUC can’t help but consider these proposals to address the state’s ongoing generation challenges, there’s already panic amongst household and businesses as Texas electricity price rise will hit both these sectors considerably. So, whether you are a commercial client or a household one, brace yourself to pay much more for meeting your Texas electricity needs.

 

Criticisms

Some opponents of these proposals say that the changed rules will only help power generators, who will be making truckloads of money by milking the common man. Creating a panic wave amongst Texas electricity consumers is also criticized by some experts monitoring the Texas electricity scene.

 

Solutions

Since Texas electricity rates will rise sooner or later, it pays to adhere to simple rules of power conservation and if possible, switch to solar power to meet some of your needs. However, the government should encourage such practices by offering tax rebates and discounts.

 

As far the PUC is concerned, it will have to take some decisions that won’t go down well with the public, but are in the interest of the state nonetheless. Still, it’s the responsibility of PUC to look for the most cost-effective solution that doesn’t create an unnecessary financial burden on its citizens. In fact, cost of Texas electricity and reliability/feasibility of the new rules in the long run should both be considered before giving the seal of approval to the proposals.

 

So, only time will tell how Texas electric consumers are affected, depending on what the PUC decides to do about the state’s power scenario.

 

About Shop Texas Electricity– Shop Texas Electricity helps consumers and businesses compare and shop for their electricity plans in Texas. Learn more about Shop Texas Electricity by visiting us at www.ShopTexasElectricity.com

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Higher Energy Prices sought by PUC to Protect against Blackouts

Texas electricity consumers should prepare to pay higher energy prices from this summer if a new policy under consideration is passed.

 

What the PUC proposes

Plagued by frequent blackouts and energy shortages in the past, especially during the months of summer, Public Utility Commission (PUC) of Texas has hinted at considering price rises to address the growing concern over Texas’s energy reserves. This state agency, which is in charge of overseeing the electricity market of Texas, signaled in April this year that it may opt for new rules to address the power problem. However, the PUC stood by the expected price rise which the new rules may trigger, as the excess money is set to support additional generation construction. This, the PUC believes, will not only solve the existing power problem, but also help secure the framework needed to meet requirements in the future.

 

Here’s an overview of some of the proposals set to be considered by the PUC:

  • Price cap set to increase: By August, the price cap in the wholesale energy market may be increased to $4,500 per MW/hour, which will be far higher than the present cap of $3,000.
  • More price cap rise in future:  During the forthcoming years, the PUC would consider increasing the cap further, and it may ultimately exceed $10,000. If this happens, the Texas price cap would become more than similar caps existent elsewhere in the US. What’s more, it could bring the state in line with Australia, where an extremely high cap of $12,500 MW/hour exists.

 

Impact of these proposals

Though PUC can’t help but consider these proposals to address the state’s ongoing generation challenges, there’s already panic amongst household and businesses as Texas electricity price rise will hit both these sectors considerably. So, whether you are a commercial client or a household one, brace yourself to pay much more for meeting your Texas electricity needs.

 

Criticisms

Some opponents of these proposals say that the changed rules will only help power generators, who will be making truckloads of money by milking the common man. Creating a panic wave amongst Texas electricity consumers is also criticized by some experts monitoring the Texas electricity scene.

 

Solutions

Since Texas electricity rates will rise sooner or later, it pays to adhere to simple rules of power conservation and if possible, switch to solar power to meet some of your needs. However, the government should encourage such practices by offering tax rebates and discounts.

 

As far the PUC is concerned, it will have to take some decisions that won’t go down well with the public, but are in the interest of the state nonetheless. Still, it’s the responsibility of PUC to look for the most cost-effective solution that doesn’t create an unnecessary financial burden on its citizens. In fact, cost of Texas electricity and reliability/feasibility of the new rules in the long run should both be considered before giving the seal of approval to the proposals.

 

So, only time will tell how Texas electric consumers are affected, depending on what the PUC decides to do about the state’s power scenario.

 

About Shop Texas Electricity– Shop Texas Electricity helps consumers and businesses compare and shop for their electricity plans in Texas. Learn more about Shop Texas Electricity by visiting us at www.ShopTexasElectricity.com

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