Cheer Up Charlies
Electric Power Shortage, the Fix
RECEIVED Fri., July 13, 2012
Dear Editor,
It has been reported lately that the maximum wholesale price (cap) was raised before calculations were finished on what effect it would have on retail prices. Prices to be paid by millions of Texans. This seems grossly imprudent.
In fact, raising the maximum wholesale price to $4,500/MWh from $3,000/MWh doesn't sound right under any circumstance when the average price during 2011 was about $53/MWh. The cap was usable for 17 hours during 2011(17 out of 8,720 hours).
The Public Utilities Commission is planning an even richer increase to $9,000/MWh in May of next year. The reason given for these increases is to inspire power companies to build plants so that we would be sure to have a surplus, a reserve margin of electric power available.
Any new power plant started now would not be online until Spring of 2014 at the earliest.
Something is wrong here. When the new plants add their power to our ERCOT grid, the desired reserve margin will be maintained and there will not be any further shortages. The rich $9,000 price would never be used.
However, between now and then our current power companies could have an opportunity to manipulate and reduce the reserve margin that we have currently. They could build their profits to the extreme, using the new higher prices paid when the low margin predicts a shortage. There is no question then as to what would happen with retail prices.
The fix. Do not raise the cap! Don’t wait to build the reserve margin in 2014 We can build and maintain the reserve margin now by offering desirable bonuses to our existing power companies when they add to their generating capacity, improve their efficiency, and work together scheduling maintenance downtimes to maintain the desired reserve margin.
It has been reported lately that the maximum wholesale price (cap) was raised before calculations were finished on what effect it would have on retail prices. Prices to be paid by millions of Texans. This seems grossly imprudent.
In fact, raising the maximum wholesale price to $4,500/MWh from $3,000/MWh doesn't sound right under any circumstance when the average price during 2011 was about $53/MWh. The cap was usable for 17 hours during 2011(17 out of 8,720 hours).
The Public Utilities Commission is planning an even richer increase to $9,000/MWh in May of next year. The reason given for these increases is to inspire power companies to build plants so that we would be sure to have a surplus, a reserve margin of electric power available.
Any new power plant started now would not be online until Spring of 2014 at the earliest.
Something is wrong here. When the new plants add their power to our ERCOT grid, the desired reserve margin will be maintained and there will not be any further shortages. The rich $9,000 price would never be used.
However, between now and then our current power companies could have an opportunity to manipulate and reduce the reserve margin that we have currently. They could build their profits to the extreme, using the new higher prices paid when the low margin predicts a shortage. There is no question then as to what would happen with retail prices.
The fix. Do not raise the cap! Don’t wait to build the reserve margin in 2014 We can build and maintain the reserve margin now by offering desirable bonuses to our existing power companies when they add to their generating capacity, improve their efficiency, and work together scheduling maintenance downtimes to maintain the desired reserve margin.
Gene Thomas
Hurst, Texas
Hurst, Texas
