The much-discussed wholesale electricity price hike starts tomorrow, leaving some to ponder whether electricity providers will pass on the higher costs to consumers.
The Texas Public Utility Commission raised the price cap on wholesale electricity price earlier this year, hoping the higher price cap would encourage companies to build more power plants and end tight reserves during peak hours.
But many consumers are waiting to see whether retail electric providers will use the recent change to make price adjustments to fixed-rate contracts.
TXU Energy, a unit of Energy Future Holdings, and NRG Energy, which owns Reliant and Green Mountain, have argued to the PUC that the change in the wholesale price cap should allow them to break fixed-rate contracts.
Other companies, such as Oncor and Direct Energy, have told the PUC that the change doesn’t constitute as a “change in law” that would allow companies to legally ditch fixed-rate contracts with customers.
Tim Morstad, the associate state director of AARP Texas, told NPR StateImpact that the changes will make wholesale electricity much more expensive for retail electric providers, and he expects companies to pass those costs onto to consumers.
“From what we can tell, the PUC looks like they’re going to allow these retail electric providers to raise prices on otherwise fixed contracts. And that’s just not fair to consumers,” he told StateImpact.
Will companies make the change?
That’s the billion dollar question for companies.
In a filing in May, TXU questioned whether the change in the wholesale price cap should allow them to make changes to fixed-rate contracts, but they also noted that the company didn’t intend to break contracts because of the “negative customer experience.”
TXU or others could change their tunes after an Texas Industrial Energy Consumers reported that the wholesale price change could add an estimate $4.7 billion annual cost on to retail electric providers.
Some analysts have said that could equate to hundreds of dollars extra for consumers, but the extra amount is a bit of an unknown.
Some skeptics of the PUC price hike have claimed the new price cap could increase electric bills by as much as 50 percent.
PUC Chairman Donna Nelson said those predications are nothing but hot air and send a panic “through electric customers in Texas.”
You can find all our coverage about the PUC’s changes to the wholesale electric price cap below:
Companies asking to change fixed-rate contracts
Steffy: Electricity prices could be a rising target for Texans
Electricity woes could leave Texas with a black eye
Texas OKs big boost in wholesale electricity rate
Steffy: Electricity price cap hike generates consumer backlash