Texas Electricity: A Year In Review

Posted on Posted in Deregulated Electricity, PUC/ERCOT, TER News, Texas Deregulated Electricity, Texas Electricity, Texas Electricity News

Texas electricity had a very busy year in 2011. There was a lot of different and important news stories from several unexpected angles that had an important impact on consumers and their electricity bills. And as far as years go, lots of the stories that started in 2011 could have a huge impact on 2012 and beyond. Lets take a look back at some of the biggest stories of the year for Texas electricity.

Record Heat, Cold, and Rolling Blackouts – Easily the biggest story of the year for electricity in Texas was the weather. Texans are used to sweltering summers, but not nearly to the level of what we saw in 2011. Records indicate it was the hottest summer in Texas since the 1700’s, primarily because of the record drought and lack of rainfall that worked to cause a 40 day consecutive streak of greater than 100 degree temperatures in Dallas, many of which were closer to 110 than 100. Electricity bills soared for customers on variable and indexed plans, and the threat of rolling blackouts seemed to hang over the entire month of August because electricity supply barely met demand. And it wasn’t just the summer. A particularly violent cold spell hit Texas in the winter and caused several power plants that weren’t properly cold-weather fortified to fail…which in turned caused rolling blackouts. And again, because supply didn’t meet demand, many customers had some big bills. All in all, the weather was was almost certainly the biggest story of 2011.

EPA Cross Pollution Rules – The Cross State Pollution rules that the EPA implemented have probably been the most talked about subject in the news that relates to Texas electricity. There have probably been at least 1-2 new stories every week on the rules and the whole situation became a complete political tug of war almost immediately. The rules are forcing many states to shut down certain coal-burning power plants that don’t meet new EPA standards. It is a concern in Texas because after the threat of rolling blackouts last summer, if the EPA changes take effect there will be even less power plants online in the summer of 2012 and the state barely skated by without rolling blackouts in 2011. Another hot 2012 summer and Texans could be in big trouble.

Regulation Loses Some Luster – For years people have been taking cheap shots at Texas deregulated electricity by pointing out that prices in Austin, San Antonio and other regulated areas of Texas are cheaper. Some supposed consumer advocates like Recharge Texas kept hammering the point for their own political agenda. Of course, that tactic started to ring hollow when it was revealed that Austin Energy has run up a 225 million dollar debt for not raising rates with market prices, El Paso Electric became embroiled in a huge political dispute over their very high regulated rates, and it was revealed that the highest rates in Texas belong to regulated Entergy and they’re going up in 2012 even more. Some other guys even got in on the act of doing a true evaluation of deregulated electricity rates in Texas, and the results show without a doubt that people who shop, save. To the tune of more than almost any other state in the country. Hooray for deregulation. The next step is to just educate more people.

Big Electricity Companies Buy Independent Power Companies – If there was one clear trend in the 2011 Texas deregulated electricity market, it was the sale of smaller Retail Electricity Providers to bigger conglomerates. Constellation Energy bought StarTex Power and MX Energy. Direct Energy bought First Choice Power for a huge sum. Dominion Power/Cirro purchased Simple Power. Just Energy purchased Fulcrum Power (Amigo and Tara Energy). NRG purchased Energy Plus Holdings (not centered in Texas), but that is on the heels of the huge energy giant purchasing Reliant and Green Mountain Energy in 2009 and 2010. Overall, most industry experts agree that the big guys in the market with cash and resources will continue to purchase the smaller companies that continue to prove successful in customer service and acquisition.

AEP Texas and their license to sell Retail Electricity – I’m not going to spend too much time evaluating this one, as I’ve recently written several huge articles with the details and long term potential impacts (parts 1, 2, 3, and 4). However, the license hearing of AEP Texas in their efforts to get a retail electricity license and operate under the AEP name is a very big deal. Even if most Texans don’t even realize it. If could lead to Centerpoint and Oncor also selling electricity, and not just maintaining power lines and poles, and make Texas electricity even more confusing.

That’s five of the bigger stories in the world of Texas electricity for the year of 2011. If any other big news in the market crosses my mind, I’ll add them to this list and send out an update. But overall, it’s been a pretty big year for deregulated electricity in Texas.

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