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Will Today’s New Electric Prices Bring Texas More Electricity?

GRAPHIC: Chart of energy use.
GRAPHIC: Chart of energy use.
August 1, 2012

AUSTIN, Texas - Texas recently was ranked last in a national survey of electrical-system reliability, which might not surprise anyone who experienced last summer's rolling blackouts.

State regulators are responding to the problem with a plan that kicks in today. They have raised the cap on wholesale prices in most of the state by 50 percent, hoping the move will ensure that energy companies have enough cash on hand to build new power plants.

Consumer advocates fear that homeowners and small businesses will bear the brunt of the increase. Tim Morstad, associate state director of AARP Texas, explains.

"The real frustrating thing here is that state regulators are saying we need to do this because power suppliers need to build more power plants, but there's no guarantee that these power suppliers are actually going to build those power plants at the higher prices."

Today's increase could simply lead to bigger profits for energy suppliers, Morstad says, adding that it might be just the beginning of higher electric bills for Texans. The Public Utility Commission has signaled that it's considering raising the cap again by as much as 100 percent, perhaps later this year.

Morstad considers any rate hike to be a safety issue for AARP's elderly members on fixed incomes. Every year, vulnerable Texans who can't afford air conditioning die from heat-related causes. While he agrees the state's grid probably is insufficient for a growing population, he thinks today's increase is premature.

"There are other things to explore - like, how can we reduce the amount of electricity that we're using, and maybe make it unnecessary to build new power plants. We want all of the different options to be explored."

Consumers won't automatically face higher fixed rates after today, according to industry representatives. More likely, Texans will see temporary increases during peak usage times.

Critics warn that raising the wholesale cap could jeopardize some of the state's smaller providers who have previously offered customers locked-in rates.

See state reliability rankings online at nerc.com.

Peter Malof, Public News Service - TX