Tuesday, February 27, 2007

The Politics of Energy

Here locally, we are obsessed with the proposed buyout of TXU Energy. Specifically, I'm concerned about what my electric bill will look like this summer.

According to the above linked story in the Fort Worth Star-Telegram, TXU is planning to drop commercial rates, but not by much.

TXU residential customers who have not already switched to one of the company's lower-priced plans will receive a 6 percent rate reduction within 30 days, and an additional 4 percent cut once the buyout is completed. The cuts would apply to about 90 percent of TXU customers who still pay the basic rate of 15 cents per kilowatt hour.

The reduction would kick that rate down to 13.5 cents per kilowatt hour, still above prices of most providers.

The Texas Public Utility Commission has raised concerns that the rate reductions aren't enough, and that by scuttling their boondoggle to build 11 more coal-burning plants, TXU will end up raising rates, not lowering them.

But TXU says it doesn't need PUC approval for the deal to go through. That may be true, but TXU does need customers for the deal to go through, and with the highest rates in the state, more customers are likely to leave the TXU fold for greener pastures with a different energy provider.

Governor Goodhair says the plan is "good for Texas."
Gov. Rick Perry, who last April stood beside Wilder in Dallas and vowed "we won't let bureaucrats jerk us around" on TXU's plan to build new power plants, endorsed the sale Monday.

"I think this is good news. Good economics. Good opportunity for jobs and wealth creation," Perry told reporters in Washington.He said the new owners assured him that they will provide enough power for the state, even though they won't build as many coal-fired generators. "There's nothing to keep them from building new plants at old sites," he said. But some conservative free-marketers were jolted that TXU's prospective buyers had given ground to environmental opponents.

I'm not that concerned about bowing to the enviro-nuts as long as my electric bill goes down and they don't gouge residents when the thermometer hits 105 in August. But evidently, we shouldn't count that out, either.
A group called Action Fund Management Llc. of Alexandria, Va., warned that if Texas doesn't build enough generating plants, it risks electricity shortages that could cause the same kind of price spikes that occurred in California several years ago.

"Power prices could spiral out of control in Texas because there aren't enough suppliers for the need and the state is so poorly connected to other states," the group said in a statement.

I can turn down the thermostat in winter and put on more clothes. What do we do in the summer?