Texas Market Update
October 16, 2023
For those of you following the Texas Energy market, you know that the pricing is increasing at an unprecedented rate. And while the cost of natural gas was the predominant driver of past pricing increases, the rising prices now are legislature-driven in response to record electricity demand events recently experienced by the state:
- House Bill (HB) 4492 established a bond that provides funds to cover the cost of the electricity scheduled for customers during the Texas Winter Storm Uri to be repaid over the next 30 years. Securitization measures are effective after a catastrophe because they spread the cost over many years and minimize the impact on customers.
- Senate Bill (SB) 3 established winterization requirements for municipally owned utilities, electric cooperatives, and power generators. The Firm Fuel Supply charges cover the cost of these yearly winterization efforts as well as ensure enough electricity supply sources are on hand to meet the high demands that may result from a winter emergency.
- Senate Bill (SB) 2627 established a billion-dollar low-interest loan and grant program for financing "dispatchable" generation facilities within the Electricity Reliability Council of Texas' (ERCOT) power region, as well as transmission and distribution infrastructure and generation facilities located in Texas but outside ERCOT's power region. SB 2627 will also provide grants and loans to finance stand-alone, "behind-the-meter" multi-day backup power sources that will isolate small portions of the electric grid from the rest of the system during emergency conditions.
- ERCOT's Nodal Protocol Revision Request (NPRR) 863 created a new ancillary service, ERCOT Contingency Reserve Service (ECRS). When dispatched by ERCOT, the ECRS will stabilize the grid’s frequency and capacity within 10 minutes of an event and provide necessary sustained assistance for up to 2 hours.
How is this impacting energy providers?
Energy providers are now billed for the expenses associated with implementing the above legislation by ERCOT. Since each Retail Electricity Provider (REP) has a different share of these ERCOT charges, each REP will have unique rates. Some providers may choose to incorporate the expense into their offered rates, or they may charge them in separate line items associated which each line-item cost from ERCOT. Your Interactive Energy Group (IEG) consultant will advise whether the offers from our Retail Electricity Provider partners have these charges are included or billed separately.
What does this mean for you?
With the new legislation and ever-changing market, it is reasonable to expect pricing to only increase. Locking in your energy rate has never been more important, especially if you are on a variable plan. Contact your IEG consultant to review your options today at 1-800-535-3983.
What else should I be aware of?
The Electric Reliability Council of Texas (ERCOT) manages the flow of electric power to more than 26 million Texas customers. ERCOT is responsible for ensuring that the supply of electricity is sufficient to meet customer demand (load) for electricity in most of the state.
When electric supply provided by all available power generation plants, wind farms and other sources becomes insufficient to meet customer demand, ERCOT begins emergency operations. During a power emergency when electric supply cannot meet consumer demand for electricity and all other operational tools have been exhausted, the demand for electricity must be reduced to avoid uncontrolled blackouts. ERCOT has a Texas Advisory and Notification System (TXANS) available for anyone who wishes to be notified by email. Please refer to the TXANS site where you can sign-up for notifications and learn more about grid conditions.
As a last resort, ERCOT will instruct electric utilities to implement controlled customer outages to reduce the customer demand for electricity on the ERCOT grid. This is referred to as load shed and will last until the power emergency is resolved by ERCOT.
Typically, before calling for controlled customer outages, ERCOT takes steps to reduce the demand on the electric grid by asking customers to reduce electric usage. Electric utilities, including yours, are obligated to immediately implement load shed procedures when ERCOT instructs.
Please review your utility’s load shedding procedure and outage information:
For more information, please review ERCOT’s informational pages: HB 4492 Securitization Firm Fuel Supply ERCOT Ancillary Services