Texas Electricity Rate rises to match New Power plants Construction

The electricity rate in Texas saw a rise due to the Texas Public Utility Commissions’ move to increase the electricity price cap by more than half, in order to sustain the construction of new power plants.

While the officials associated with the increase are categorical on the addition costs, in order to meet the demand in the following years and ensuring that there are no black outs during the hot summer days.

Most hope that the new profit band available will encourage greater participation in building of more and more power plants. However, for consumers such middle of the course increases will only result in additional cost burden. Estimated costs would actually be to the tune of BILLIONS, and only an assurance of a new power plant construction as well as higher electricity rates.

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RATE Cap in effect from Aug 2012

The new wholesale rate cap will be at $4,500 as against the earlier $3,000 per megawatt-hour. The new proposal was voted for by a 3-person commission that was appointed by Republican Governor Rick Perry.

However, the price cap will not terminate at this price. It is most likely to increase, almost triple to $9,000 by 2013. The commission saw the proposal being voted with a 2 -0 margin with Donna Nelson and Rolando Pablos supporting the increase. However, the Commissioner Ken Anderson, abstained from voting as he is of the belief that the electric rate increase in the summer would be too early to come into effect. He believed that electric providers needed to be given additional time to adjust to the new electricity cap rates and include a transit phase for effective price hike.

The rate cap increase is within grid for the Electric Reliability Council of Texas grid that covers across the state.

Texas AARP objects to arbitrary rise

There is a strong opinion among the consumer segment as well as Texas AARP that there has been no formal study of the impact of such a rate increase in the households across Texas.

In fact, the Industrial consumers, who largely include the refineries as well as chemical manufacturers, have indicated that the rate increase would result in price instability, resulting in smaller retail providers from successful and competitive running of their business.

Most contend that raising energy prices now, when actual production is supposed to begin only in 2014. The question now is whether consumers will have to pay for power they consume only two years from now.