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Keeping Texas electricity costs down with help from Big Brother

11/01/2012 9:40 PM

11/02/2012 6:27 AM

Count on it: The Public Utility Commission is heading down a path to increased electricity costs for most of Texas. The only real questions are how it will happen.

The questions involve how the three-member appointed commission will change the deregulated energy market carefully crafted by the 181-member elected Legislature beginning in 1995.

They also involve expanding how Big Brother Energy might reach into your home and push up the thermostat so the air conditioner uses less power -- and about how that could be a good thing.

The PUC, the agency that watches over the Texas electricity market and can change the rules, started down the path to major change last year. The members were alarmed that the state was about to run short of generating capacity.

In February of last year, a combination of bitterly cold weather and generator shutdowns led to a sudden shortage of electricity in the power grid supervised by the Energy Reliability Council of Texas, which covers most of the state. The shortage led to "load shedding" (rolling blackouts) across the grid.

(I sat in a dentist's office waiting for the power to come back on so I could have a root canal. It did, the dentist got the job done quickly and I went home. My wife, Sandy, nursed my moaning self back to health the rest of that miserable day.)

The power failure also brought not panic but heightened concern. Blackouts are a big no-no. While storms and other natural causes knock out electrical supply far more frequently, blackouts by the power suppliers are an indication that the system is not well-managed.

Lots of businesses depend on a reliable supply of electricity. They'll leave if they can't get it.

The PUC aims for a reserve margin of available generation capacity so blackouts won't happen. The standard is a strong one by industry comparison, enough capacity that under the worst predictable conditions a shutdown would happen only once in 10 years.

The PUC pegs it at 13.75 percent more generating capacity than the maximum predicted need. A consultant saw danger the margin would slip to 9.8 percent by 2014.

By now, Texans are used to shopping for lower-cost electricity. The market that started moving toward deregulation in 1995 has worked as it was supposed to, driving prices down.

For that and other reasons, power companies haven't been interested in building more generating capacity in Texas. Not enough money in it.

So the PUC set out to change that. The commission approved a 50 percent increase in the price of spot-market electricity during periods of peak demand, to $4,500 per unit from $3,000. Last week, the PUC approved more increases, pushing the peak price to $5,000 next year and $9,000 by 2015.

Exactly what that will mean for residential customer bills isn't known. But it's not enough. A consultant has told the PUC it can be expected to draw only enough capacity construction to push the reserve margin to 10 percent, far short of the commission's 13.75 percent goal.

Any way you look at it, customers will have to either use less power or pay more. That's where Big Brother comes in.

The commission is considering "demand response" programs for residential power customers. Your power company would install a special thermostat or a device on your air conditioning compressor so the company could lower your power use on a peak-demand, hot summer afternoon.

They'd only do it if you sign up, and they'd pay you $50 or more to join. One proposal says they'd let you know the day before so you'd know what to expect. Some electrical providers have similar plans now, and others are working well in Florida and other parts of the country.

We're conditioned not to like Big Brother. But many of us are also conditioned to hang on to our money if we can.

I'd consider signing up if the price were right (so long as Sandy agrees).

Mike Norman is editorial director of the Star-Telegram / Arlington and Northeast Tarrant County. 817-390-7830

Twitter: @mnorman9

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