More profit, more power plants. Right?
POSTED: Friday, October 26, 2012 - 4:28pm
UPDATED: Monday, October 29, 2012 - 12:54pm
The Public Utility Commission has voted to raise electric rates.
But it’s not the rates that affect customers, at least not yet.
We are talking about the cap on wholesale electricity.
It’s a little complicated, but it amounts to the PUC bribing power companies to build more plants.
OK, the word bribe may be a bit harsh, so let’s call it an inducement.
The problem is the hot Texas summer. We use a lot of power. And when it’s really bad like 2011, power plants are running at peak capacity, but that might not be enough. So the PUC wants them to build in more generating capacity than they need 95% of the time
So, the Public Utility Commission has tripled the top price companies can get for their power at peak times, from $3000 per megawatt in January to $9000 by 2015.
But, power companies, refineries or car companies don’t like to produce more product than the public needs.
It’s called supply and demand and the closer you can get them to equal, the better.
And if you have a plant, or a bank of generators sitting idle just in case of ultra high demand, that’s an investment that’s earning exactly zero.
But they can’t make anyone use the money to build more capacity. They simply hope it will induce them to.
We got this statement from Energy Future Holdings, the parent company of TXU and Luminent.
“Energy Future Holdings is supportive of the leadership the Public Utility Commission has taken in addressing these difficult issues for the market.”
And will consumers ultimately eat this price hike? Of course.
One group estimated it would add $50 bucks a month.