Recent spikes in the wholesale electricity market may bring very high prices for several thousand North Texans who have been involuntarily moved this month to default electric providers.
That’s the word from the Texas Public Utility Commission, which met in emergency meeting Thursday after spot prices on the wholesale power market spiked to the maximum level allowed by law. That spike occurred on Wednesday, although very high prices were also recorded on Tuesday.
Wholesale prices directly impact those rates charged by the so-called providers of last resort, which are those companies that provide continuity of service for Texans whose regular electric companies have gone bankrupt or abruptly leave the market.
Apparent failures at two separate electric companies this month sent thousands of North Texans to such providers of last resort. According to back-of-the-envelope calculations, a customer on a fixed-rated contract from one of those failed companies could see their rates more than double when they go to the POLR.
During the emergency meeting Thursday, PUC commissioners urged customers to get off Provider of Last Resort companies as soon as possible. They also signaled to POLR companies that although PUC rules allow POLR companies to charge high rates based on the wholesale market, they can also charge less.
A representative of Assurance Energy, an affiliate of TXU that serves as a POLR company in North Texas, did not have estimates readily available of how much it would be charging.
The spiking prices in the wholesale energy market also could spell bad news for ratepayers generally, as they may signal upward pressure on retail energy prices. Likewise, the high wholesale costs could cut deeply into the bottom line of electric retailers, with some analysts predicting more financial failures in the months ahead.
Consumer advocate Randy Chapman said the PUC should insist on more financial and performance assurances from electric companies so consumers have more confidence that when they select an electric company, it won't go abruptly out of business.
“Anyone with two SUVs, a Persian carpet and $100,000 can call themselves an electric company in Texas," he said.