قالب وردپرس درنا توس
Home / US / How the deregulated electricity market in Texas led to excessive electricity bills

How the deregulated electricity market in Texas led to excessive electricity bills



She told CNN on Monday: “I don’t know what to do with those who complain about my bill.” “At the same time, my complaint is: How do I pay?”

Those who are very familiar with the Texas energy market say that these electricity costs are not errors, but the function of the state’s deregulated system.

Although the vast majority of Texans pay for electricity at a fixed price and get a predictable monthly bill, some Texans choose to pay based on the spot electricity price at any given moment. As anyone who adopts Econ 101 knows, these prices can reach astronomical heights when supply drops and demand surges.

Anthony Shaw, a power engineer and founder of energy solutions company Progeneration Energy, said: “In theory, it has been working well because, in theory, capitalism should do it.”

; When it breaks, it does break very, very badly. In this case, this is what we see.”

Supply and demand drive up prices

Last week’s winter storm shook the system in a way that consumers knew it was possible but did not expect.

With the arrival of the storm, the demand for electricity heats up with the cold in Texas. At the same time, due to winter storms and unprepared infrastructure, generators for natural gas, coal, nuclear, wind and solar are eliminated, and electricity supply is drastically reduced.
This is how a week of severe weather and disaster happened in Texas

Therefore, spot electricity prices have risen.

On any given day, the price of electricity is usually around a few cents per kilowatt hour. Last week, the price soared to the legal maximum price set by the Public Utilities Commission of Texas (PUCT) of $9 per kilowatt-hour.

This in itself is not particularly uncommon. On the hottest days of summer, electricity prices for one or two hours sometimes reach the highest. However, given the long cold wave, the price last week was at its highest level for several days.

Daniel Cohan, associate professor of civil engineering and environmental engineering, said: “Companies and consumers were caught off guard to see the winter prices soar so high, and what makes this situation really different is that prices stay so high for so long.” Sri Lanka University.

Some customers pay market prices

The vast majority of Americans, even Texans, do not pay the direct market price for electricity at any given moment.

Instead, most companies pay retail energy suppliers (basically middlemen), who buy electricity a few years in advance and then set a fixed rate for customers. Overall, this will cost extra, but will make the electricity bill more consistent.

However, some Texans (such as Tanner) use a service called Griddy, which connects customers directly to the wholesale electricity market and charges $9.99 per month.

This setting may be cheaper and has a certain logical meaning. When prices increase, customers have an incentive to use less electricity. At other times, electricity prices may even become negative, which means you can actually get paid for electricity. Griddy said on its website that wholesale electricity prices were lower than the Texas average 96.9% of the time.

Texas officials are investigating shocking energy bills amidst storm price spikes

However, as we saw last week, there is a risk of directly relying on fluctuating market prices. Moreover, when power outages cause life-threatening problems, this incentive mechanism will not work. How much dollars should customers spend on the potential to lower their body temperature?

“(Usually) this means that you will get better deals because you are not paying the retailer a profit, but soaring prices to unprecedented levels and duration, which really makes people vulnerable,” Cohan said.

Xiao explained: “Some people in the system are in trouble.”

This is the case with Dallas resident DeAndre Upshaw, who also uses Griddy. He said that when he opened the latest electricity bill, it was “very shocking.”

Upshaw told CNN on Saturday: “Although I tried to obtain gas and groceries and make sure my pipeline would not explode, the last thing I thought of was a $7,000 bill provided by the utility company.”

Griddy published several articles explaining the high prices on its website and stated that it had sent emails to customers in an attempt to switch to other services at a fixed rate. The company tried to blame PUCT for setting the electricity price at $9 per kilowatt hour.

Griddy said: “We intend to fight for the rights of customers for this and work side by side with them-to reveal why this price increase is allowed as thousands of Texans lose power,”

PUCT said on Saturday that it had “investigated the factors that contributed to the destructive factors in the winter in Texas.”

What the officials did

For individuals who use Griddy, high electricity bills are not just a problem.

Although most Texans do not directly bear these high prices, their retail energy suppliers may face such high prices.The fee is likely to be passed on to the customer in the following form Interest rates will rise in the future.

Cohan said: “If the retailer does not lock in enough power, you will have a lot of bankruptcy.” “When someone gets paid ($9 per kWh) and most consumers are paying ($0.1 per kWh) , There will be someone in between.

He said that with Griddy, the individual bears the cost, but in other parts of the market, retail providers, cities or municipal utilities may encounter trouble.

For example, Denton in the Dallas-Fort Worth metropolitan area is one of the few cities in Texas that directly purchase electricity. On Monday, New York City received an energy bill of $207 million in just four days, which is three times its full-year energy cost for fiscal 2020.

Denton City Assistant Manager and Chief Financial Officer David Gaines (David Gaines) said that the “unprecedented” bill will be gradually passed on to residents at higher interest rates.

Deep freeze causes Texas electricity prices to soar 10,000%

Xiao explained that preparing the power system to prevent this from happening will also cost money and may raise prices for ordinary consumers.

He said: “In order to develop an emergency plan, a certain price must be paid.”

Texas Governor Greg Abbott said in a statement that he was holding an emergency meeting last week to investigate the situation.

Abbott said: “For Texans, who have suffered for days in the cold without electricity or heat, the energy cost soaring now is unacceptable.” “In order to protect the family, I am actively and vice versa. The governor, the Speaker of the House of Representatives and members of the legislature work together to develop solutions to ensure that Texans are not deceived by unreasonable increases in energy bills.”

Political leaders are debating whether to use federal emergency funds to provide relief, and some local officials have urged the state to pay high costs.

Houston Mayor Sylvester Turner told CBS on Sunday, “For these high costs, it is not consumers who should bear these costs.” “The bill should be passed to Texas. “

CNN’s Devan Cole, Anjali Huynh, Shannon Liao, Samira Said and Konstantin Toropin contributed to this report.


Source link