Residential Electricity Consumer Watchlist

What to Ask and Watch Out for when Choosing a Residential Electricity Provider   

By Donny Eisenbach

February 10, 2007   

Contact me    

Residential Electricity is usually a mystery as far as what a consumer is actually paying for or even agreeing to before signing a contract. The beginning decision on who to switch to can be such a nightmare many consumers stay on a higher electric rate simply because the information available to determine what to look for when choosing electricity companies is not available. The Texas market happens to be the biggest market in terms of choosing a competitive retail electricity provider. Because of this it’s important to see how they have done things in Texas in order to know what to do in the newly deregulated markets throughout the United States.Illinois has just begun to deregulate their electricity market and there will be millions of residential customers wondering what they should do when deciding on who to switch to. To begin lets take a look at an electric bill. There are three components to an electric bill. There is the “Energy only” portion of the bill. This is the portion of the bill that has become deregulated and is available to be competitively priced. You then have the “Wires charges”, these also go by the name “TDSP charges”, “Transmission and Distribution charges” and “Pass thrus charges”. These charges are regulated by the government and will always be regulated. There will never be more then one electric pole and wire coming to a residential house. The final charges on the bill are the “Taxes”.  

Knowing the three components of the bill helps in determining what questions to ask a Retail Electric Provider who may call on the phone or send a mail advertisement attempting to switch a consumer to their residential electricity product. Usually the Retail Electric Supplier will quote a retail consumer a “energy only” rate that will be low and attractive sounding. The questions a consumer should ask are, “Is this a fixed electric rate or a variable electric rate?” If the provider says it is variable then that means it can change. The rate may be good for the first month but can then increase dramatically on the second month and from then on. The exception to this would be if it was a true follow the market rate that followed the natural gas market. If this were the case then the rate could go up or down based upon what natural gas is doing. The consumer would be taking on this risk and so the rate should be much lower then the standard fixed rate offered by the same electric company. If the fixed rate is not much different then it would be better to stay on a fixed rate or find an alternative electric company.

The next question to ask would be, “Are there any fees that have been taken out of the Retail “Energy only” rate and added in a line item somewhere else in the contract?” Sometimes a Retail Electric Provider will strip out some charges that normally appear in the “energy only” rate and put this in a line item close to the “TDSP charges”. Several providers do this and a consumer should look out for this unethical but legal business practice. So far the Texas PUC has not legally come down against any of the Retail Electric Providers that have done this. We expect that eventually one of the electric companies will be sued and the PUC will rule that this type of clever contract term and agreement clause cannot be done. Until then look out for this. A consumer may think they are signing up on the best electric rate when it may be one of the worst electric rates. Another question to ask is, “What is the early termination fee?” Most electric providers charge a standard penalty that is something like $10 -$15 a month of however many months remain on the electric contract. This would be considered a fair penalty. The reason this would be fair is because the Retail Electric Providers buy this energy out on the open market, hedge it, split it up and then resell it. It is not like a cell phone contract. It’s more like buying a stock and watching it go down and deciding that you want your original investment back. The Electric Provider is of course not going to be willing to let you out of the contract unless rates are even higher then where they were when you got in. The worst case electricity contract early termination penalty that we have seen was with Gexa Energy charging 3 months averaged out bills as the penalty. This of course would be a large sum for a family who most likely is being evicted or moving out of state having to now pay an unreasonable cancellation panelty.

The final question would be to ask if the “TDSP charges” have the energy only charge bundled in with it. Occasionally a provider will quote an electric consumer a bundled rate that includes both the “TDSP charges” and “Energy only” charges. Since an electric consumer cannot do anything about the “TDSP charges” it should not be a consideration when pricing among several electric providers. If this is the case the “Energy only” portion of the rate needs to be determined so the consumer can succesfully compare the rate with other competitive electric rates being offerred.

In summary, be sure to compare residential electricity rates wth multiple electric companies and suppliers before making a decision. Also, most states require the electric provider have an electricity facts label as a step to educate and inform the consumer so they do not buy something they were not properly educated about beforehand. This electricity facts label along with this article will help in educating an energy consumer to make good buying decisions when finally deciding on an electricity company.

Additional Resources   

http://www.icc.illinois.gov/consumer/   

http://www.powertochoose.org/   

http://www.eia.doe.gov/neic/brochure/electricity/electricity.html

is usually a mystery as far as what a consumer is actually paying for or even agreeing to before signing a contract. The beginning decision on who to switch to can be such a nightmare many consumers stay on a higher electric rate simply because the information available to determine what to look for when choosing electricity companies is not available. The Texas market happens to be the biggest market in terms of choosing a competitive retail electricity provider. Because of this it’s important to see how they have done things in Texas in order to know what to do in the newly deregulated markets throughout the United States.Illinois has just begun to deregulate their electricity market and there will be millions of residential customers wondering what they should do when deciding on who to switch to. To begin lets take a look at an electric bill. There are three components to an electric bill. There is the “Energy only” portion of the bill. This is the portion of the bill that has become deregulated and is available to be competitively priced. You then have the “Wires charges”, these also go by the name “TDSP charges”, “Transmission and Distribution charges” and “Pass thrus charges”. These charges are regulated by the government and will always be regulated. There will never be more then one electric pole and wire coming to a residential house. The final charges on the bill are the “Taxes”.  

  is usually a mystery as far as what a consumer is actually paying for or even agreeing to before signing a contract. The beginning decision on who to switch to can be such a nightmare many consumers stay on a higher electric rate simply because the information available to determine what to look for when choosing electricity companies is not available. The Texas market happens to be the biggest market in terms of choosing a competitive retail electricity provider. Because of this it’s important to see how they have done things in Texas in order to know what to do in the newly deregulated markets throughout the United States.Illinois has just begun to deregulate their electricity market and there will be millions of residential customers wondering what they should do when deciding on who to switch to. To begin lets take a look at an electric bill. There are three components to an electric bill. There is the “Energy only” portion of the bill. This is the portion of the bill that has become deregulated and is available to be competitively priced. You then have the “Wires charges”, these also go by the name “TDSP charges”, “Transmission and Distribution charges” and “Pass thrus charges”. These charges are regulated by the government and will always be regulated. There will never be more then one electric pole and wire coming to a residential house. The final charges on the bill are the “Taxes”.  

Residential Rates are back down to the 10 cent per KWh range.
Consumer Strategist
 

Texas Electric Company Reporting – Donny Eisenbach
 

10 – 10.8 cent per KWh electricity rates are showing back up in Texas but are these rates legit?
January marks the beginning for a month with no marked price-to-beat rate.  This means incumbent electric providers can charge whatever they want. A few of

the electric retail providers pricing electric energy rates at around 10 cents per kilowatt-hour to 10.8 cents. Reliant Energy still offers a 16 cent per KWh

residential rate even though rates have dramatically climbed down. This would be price gauging by most peoples estimation. What type of people do they charge

this rate to?  Someone is buying but exactly who and how did they get you?
 

The public utility commission estimates about 30% of North Texas have switched from TXU to another Retail Electric Company.
 

Now that the price-to-beat is no longer active is it a good time to switch retail electric providers?
 

There are these low electric rates being offerred on a month-to-month basis but these plans are strictly market rates so when natural gas rates go up so does

your rate.  The spikes that occur with natural gas can sometimes be 3 times higher then a previous month.  Is this really a smart choice for Residential

customers who don’t know any better? Startex Power, Reliant Energy, Commerce Energy, and Amigo Energy currently have these market plans available and they

are good so long as you know what you are getting into.
 

When the natural gas spot rate goes up on the NYMEX and Henry Hub expect the same to happen to electricity rates. Natural Gas and coal makes up about 75% of

the electricity cost of generation.  Expect to see consumers feeling as if they were tricked into something they weren’t educated on.
 

While Natural gas continues to fall lower this does represent an opportunity to educated consumers who are willing to take on the risk of gas spikes. If a

consumer is concerned about an unexpected rate hike because of the commodity market in Natural Gas rising higher from anything from a hurricane to a mideast

war issue then stay away.
 

No one wants a higher electric bill but this is what happens when taking on your own risk instead of letting the electric company hedge the electric energy

and offer a fixed rate. Customers make the decision so long as they are informed about the rate, otherwise they get into a low rate they know nothing about.

Reliant Energy is a large enough experienced company to lead the way in providing a truly understandable natural gas electric plan that anyone can

understand.  We hope they choose to do this.
 

Commerce energy is aggressively seeking new customers and have a 10 cent market rate that is competitive when put side-by-side the other Retail Electric

Providers.
 

Reliant energy, has a new PowerTracker plan that starts at 10.3 cents.
 

Reliant Energy’s rate is based on a Natural Gas formula using the NYMEX natural gas futures’ contract price and a market conditions multiplier that is

supposed to reflect market changes.
 

As with any electric rate the rate also has some built in fees related to the customer’s electric utility TDSP service area.
 

It is veyr important for consumers to stay informed because this plan is absolutely not for everyone and could easily be cause for some irate non paying

customers if Natural Gas Prices spke up.
 

With a residence you usually pay at the most $500 a month so if the electric rate spikes the Retail Electric Providers assume you will be able to pay the

bill still if the average month bill increases to say $1000.  At this time a consumer who was unhappy could convert to a fixed price to avoid any future rate

spikes.
 

Because these plans have no long term commitment you can convert to fixed price at any time.
 

The big companies have coined the term “market-tracker” as the type of product that follows the Natural Gas futures market on the NYMEX exchange. The

market-tracker plan follows natural-gas prices. TXU’s plan is a 24-month contract with a $200 cancellation fee at 15 cents a killowatt hour right. This rate

is extraordinarily high and the people locking into this rate are being gouged severily.
The positive aspect of this plan is that it caps its rate and provides protection from short-term spikes. The negative to this plan is that it does so at a

premium that makes no sense for being so high.
 

Now that the “price to beat” rate is finished because of the government deregulation process, we will see continued lower rates in the form of market rates

for energy and fixed electric rates.
 

Gas prices were as high as $12 after Hurricanes Katrina and Rita but since this time the natural gas spot price has dropped enough to allow for truly

discounted rates at around 10 cents per KWh.
Natural gas prices are purely a guessing game and are highly speculated as to what they will do next.  As of Feb 2007 they are currently quite a nit above

the averages from lat year at this time.  This is due largely to colder then expected weather.  This week in Texas the weather is warming up again and

natural gas prices will likely drop the week of Feb 4 2007.
 

Because of the volatility, the lack of a minimum term may help consumers, he said.
 

“If prices get to the point beyond their tolerance level, they could leave the rate,” he said.
 

At this time the deregulated electricity market has not seen the low rates promised by the Texas deregulation plan but the more interest energy consumers

show in a true energy market rate the lower the rates will go.
 

The best residential electric contract option at this time in the market would be a 10 cent fixed priced product for residential customers.  Right now the

demand is just not there for electric companies to go there.
 

Here are a few Retail Electricity Companies offering Market Rate prices following the natural gas market.
 

10.3 cents
 

Reliant Energy,
 

866-222-7100,
 

www.reliantenergy.com. Plan becomes available Monday.
 

10.4 cents
 

Commerce Energy, Costa Mesa, Calif.: 877-226-5425, www.commerceenergy.com. Includes $4.95 monthly service charge.
 

10.8 cents
 

StarTex Power,
 

866-917-8271,
 

www.startexpower.com.
 

10.8 cents
 

Amigo Energy,
 

888-469-2644,
 

www.amigoenergy.com. $6.95 charge for using less than 500 kWh.
 

SOURCES: Reliant Energy,
 

Commerce Energy, StarTex Power, Amigo Energy
 

FOR MORE INFORMATION
 

Natural-gas prices can be followed on www.naturalgasprice.net
 

TXU for instance would be your “POLR”

For those of you who wonder what happens when an electric company goes bankrupt and your concerned about losing service, here is an article to alleviate this fear.

Safety-net Electric Rates Fall in Houston area
PUC, TXU Agree on new “Provider of Last Resort” Terms

Contact:
Terry Hadley 512-936-7135
Pager: 512-322-1457

Tuesday, November 20, 2001 –An agreement between the Public Utility Commission (PUC) and a TXU affiliate known as Assurance Energy reduces previously announced rates and fees for guaranteed back-up electric service in the Houston area and south Texas when retail competition begins Jan. 1, 2002.

Residential customers of investor-owned utility affiliates will enjoy a six-percent rate cut, adjusted for fuel prices, when retail competition begins on Jan. 1, 2002. Customers who choose a competing retail electric provider (REP) may enjoy even larger cost savings. However, it is necessary for the PUC to designate a “provider of last resort” (POLR) to serve as a safety net if a customer’s REP cancels electric service.

“I commend Assurance Energy for agreeing to lower its POLR rates and fees,” said PUC Chairman Max Yzaguirre. “This is good news for the Houston area and south Texas, and reflects the lower natural gas price environment that currently exists.”

The previous agreement was negotiated early this year when the price for natural gas, a major fuel for generating electricity, reached historical highs. Currently, natural gas prices are substantially lower. While the original agreement resulted in a residential rate of 12.5 cents per kilowatt-hour (kWh) for summer months and 9.5 cents per kWh for non-summer months, the renegotiations resulted in rates of 9.5 cents per kWh for summer months and 7.5 cents per kWh for non-summer months. These rates do not include non-bypassable transmission costs.

Under the Texas electric restructuring law, a POLR is required to:

Assure continued service.�
Offer a standard retail service package for each customer class at a fixed, non-discountable rate.�
Respond to customer inquiries and follow applicable customer protection rules.
Provide the same benefits for low-income customers as other providers.
POLR service is relatively high-priced due planning costs and uncertainty in the number of customers and electricity load. This service is intended to be temporary and used only under infrequent circumstances if a REP is unwilling or unable to provide service, or if a REP terminates a customer for non-payment. Customers will have at least 10 days notice to shop for another REP before being switched to the POLR. If the customer is unable to locate a new provider within 10 days, then the POLR can provide service during the time that the customer is shopping.

Assurance Energy will serve as POLR for residential customers for at least six months. The PUC may adjust the rate if fuel prices change significantly.

POLR customers covered by the agreement with Assurance Energy are residential and small non-residential customers (electricity demand up to one megawatt) currently served by Reliant/ HL&P, Texas New Mexico Power, Central Power and Light, Sharyland and West Texas Utilities, along with large non-residential customers (demand greater than one megawatt) currently served by TXU.

The PUC encourages competition and customer choice while ensuring electric and telephone operations, services and rates are fair and reasonable.

All PUC News Releases are available at www.puc.state.tx.us

Last Updated: 02/03/03

Joint venture cancels plans to build natural gas pipeline
CenterPoint, Spectra don’t draw enough customers to start project

By TOM FOWLER
Copyright 2007 Houston Chronicle

TOOLS

I know this article about TXU’s power plant sounds unsafe and definitely unclean to both the environment and people but you have to ask yourself, how are you benefiting from the Texas power grid up to this point.  Everyone had to start with coal and natural gas at some point.  They are now working on FutureGen projects to make the environmental impact less of a problem and we as a nation are slowly moving into new emerging cleaner power generation options.  The point is to not listen so intently to the alarmests.  Sometimes people will harp on anything to get noticed and make a few dollars.  I just ask that you take the alarmist conspiracy mentality of some with a grain of salt.

Now for the article:

NEW YORK, Jan 30 (Reuters) – TXU Corp. (TXU.N: Quote, Profile , Research) plans to restart the 750-megawatt Unit 3 at the Martin Lake coal-fired power station in Texas on Jan. 30 after fixing a tube leak, the Dallas company told Texas regulators in a report.

The company shut the unit by Jan. 29.

The 2,250 MW Martin Lake station is located in Tatum in Rusk County, about 200 miles (322 km) north of Houston. The station includes three 750 MW units numbered 1 through 3, which entered service in 1977, 1978 and 1979, respectively.

TXU in April filed an air permit application with the Texas Commission on Environmental Quality for a proposed 800 MW Unit 4 at Martin Lake, which would burn subbituminous coal from the Powder River Basin in Wyoming and Montana. If approved, TXU expects Unit 4 to enter service in 2010.
On Feb. 21, the State Office of Administrative Hearings will conduct a consolidated hearing on seven of eight of TXU’s contested new coal plant proposals, including Martin Lake 4.Separately, starting in the spring of 2009, TXU said it would begin installing selective catalytic reduction systems to Units 1-3 to reduce nitrogen oxides and sorbent injection technology to reduce mercury emissions. The units already have scrubbers to reduce sulfur dioxide.
One MW powers about 500 homes in Texas.

TXU’s unregulated TXU Power subsidiary owns and operates the station.

TXU owns and operates more than 18,000 MW of generating capacity, markets energy commodities, supplies energy to more than 2.5 million customers in Texas and transmits and distributes electricity to more than 2.9 million customers in the state.
 

Competitive Providers Are Pricing But It Is Sometimes Confusing

Spark Energy serves Residential and Commercial Customers in Texas and have recently been pricing very competitively.  Deregulation in Texas has begun to show some positive affects for Residential customers as the rates have dropped about 1 penny per KWh over the standard highs. With deregulation coming Jan. 1, customers should be ready to shop around for the best electricity provider.
TERESA McUSIC
In My Opinion

Choosing an electricity company these days is getting as complicated as picking a cellphone plan or a variable-rate mortgage.

There are long-term contracts out to five years. Or short-term ones that go month to month. There are plans that track natural-gas prices or use renewable energy. They have features like locked-in rates and lower summer rates. Some plans go up during peak summer months, and some go down.

And those are just the offerings from TXU.

On Jan. 1, TXU’s rates will no longer be regulated in North Texas, and industry observers hope electricity prices in Texas will drop as competition heats up.

But, in addition to the eight plans offered by market leader TXU, 16 other electric retailers offer more than 30 plans — a big field compared with the handful of plans and providers available when deregulation started in 2002.

Consumers have close to 50 plans from which to choose — with different rates, perks and, in some cases, hidden or high fees.

You may need a spreadsheet to find the best plan.

“There is no simple process for side-by-side comparisons,” said Tim Morstad, utility specialist for the state Office of Public Utility Counsel, which represents consumers’ interest before the Texas Public Utility Commission (PUC). “People have to do their homework.”

TXU customer Karen Kaiser recently called the Star-Telegram to complain about the process. She said TXU’s marketing company hung up on her when she asked about its $100 preferred-customer bonus. Then, when she called TXU to complain, she held for nearly an hour and never got a satisfactory answer, she said.

“It’s been frustrating,” she said. “I would like to change because of the experience I’ve had with TXU, but I’m a creature of habit.”

That may sum up the feelings of many of the 2.2 million customers who have stuck with TXU during the past five years, despite the retailer’s price increases.

TXU’s plethora of plans is daunting, TXU spokeswoman Sophia Stoller said.

“Customers have different wants and needs,” Stoller said. “For some, a price guarantee or savings is very important. Others want flexibility.”

And she acknowledged that the process is confusing.

“Even my friends and neighbors tell me they don’t know where to start,” Stoller said.

Although comparing rates, reading the fine print in contracts and guessing whether the company you choose will be around for years are hassles, no one can tell you the best choice.

But there are some common trends and cautionary words from the few experts out there to help consumers decide:

Prices among some competitors are going down. Three providers offer rates that beat TXU’s “price to beat” of 15 cents per kilowatt-hour by as much as 23 percent. The leader last week was Houston-based Spark Energy at 11.5 cents per kwh for a three-month plan or 11.9 cents per kwh for a 12-month plan.

These figures were gathered by calling the company. The rate on http://www.powertochoose.com/ was not updated as of Friday to reflect these rates. So if you see a good rate, call to the company to confirm.

Other low-price leaders include StarTex Power, National Power and Gexa Energy — all Houston-based retailers with rates 17 percent to 19 percent lower than TXU’s price to beat.

The lower rates reflect today’s price of natural gas, Morstad said. TXU, which has had a regulated price, was allowed by the PUC to raise its rates as natural-gas prices increased, but it has not lowered rates as gas prices have dropped.

No rate increases for three years. TXU customers who don’t sign up for any plan and remain a TXU customer won’t see higher prices for three years, Stoller said. On Jan.1, the company will put these customers in its Flex Protect plan at the rate of 15 cents per kwh that will not go up for three years but could go down, Stoller said. Customers can switch out of this month-to-month plan anytime without penalty.

Peak/off-peak rates continue for most TXU plans. All of TXU’s plans except its EarthWise renewable-fuels plans will have peak and off-peak rates that are higher in the summer, when electricity demand is high, and are lower the rest of the year. Stoller said that formula is built into the rate averages that consumers see when they sign up for a plan. TXU is the only retailer that has this peak/off-peak formula in its average.

Don’t lock into long-term plans. With deregulation on Jan. 1, TXU will no longer need the PUC’s permission to change rates, and the price-to-beat program will go away. Consumer advocates like Carol Biedrzycki, founder of the Texas Ratepayers Organization to Save Energy, say locking in your electricity for any period at any rate above 12 cents per kwh is a mistake. The marketplace is likely to see a lot of price changes next year.

Use the Web to compare plans. Consumers without Web access are hindered by relying on limited information from mailers or marketing companies. Some of the best deals today are from companies like StarTex, which has no advertising budget, according to Robert Zlotnik, the company’s chairman and chief executive.

All electric retailers have Web pages to describe their products, services and contracts, and the PUC has a list of retailers and prices at http://www.powertochoose.com/, a good starting point for research. The PUC will also print out current offers and mail them to you.

Call the Texas Electric Choice hot line toll-free at 866-797-4839.

TXU’s plans are listed at www.txu.com/plans. Stoller confirmed that the marketing company hired to call TXU customers will initially offer just three of TXU’s plans. Customers should ask about others, she said.

Built-in consumer protections remain. The Texas Legislature offers protections such as no cost for switching to another retailer and automatic moving of your account if your company leaves the market. You won’t lose power for even a day, and most companies in today’s marketplace have been active for several years. Also, remember that TXU Electric Delivery will repair lines and handle emergencies no matter which retailer you use.

Global-warming concerns. To buy renewable energy, look for plans noted with a green check mark at http://www.powertochoose.com/, or go to http://www.powerscorecard.org/ to see environmental ratings of electric retailers.

Perks. Retailers offer cash bonuses, airline miles and discounts on merchandise (such as in TXU’s Energy Rewards) for signing up, but keep your eye on the rates. When the perks are gone, your summer electric bills will remain.

Read the contracts. Some retailers add costly fees that others don’t. Spark Energy, for example, has an $80 fee for restoring power on a delinquent account that has been updated — a fee Biedrzycki says may not comply with PUC rules. Spark also charges $50 for sending a termination notice. Another common fee is for canceling a long-term contract. If your credit is good, most companies waive the deposit requirement.

To begin, let me just say that raw materials are what make a country valuable.  We need to use these resources and continue to use them in one way or another rather then export them out to another country.  It’s not easy to just completely cut off spending on any future coal or natural gas power plant in order to save the environment.  Because this is the way things are the government has made a practical plan to save the environment and continue to use and convert our raw materials into energy. As a contrary example, Canada cuts down almost all of their beautiful pine wood trees and sells the raw material to other countries.  Rather then leaving them in their own country and making something out of it they cut it all down and send it away.  Now that is an obvious waste of a natural resource.So here it is the energy article you have all been waiting for.

is an initiative to build the world’s first integrated sequestration and hydrogen production research power plant. The $1 billion dollar project is intended to create the world’s first zero-emissions fossil fuel plant. When operational, the prototype will be the cleanest fossil fuel fired power plant in the world.The initiative is a response to President Bush’s directive to draw upon the best scientific research to address the issue of global climate change. The production of hydrogen will support the President’s call to create a hydrogen economy and fuel pollution free vehicles; and the use of coal will help ensure America’s energy security by developing technologies that utilize a plentiful domestic resource.Additionally, other countries will be joining the U.S. to participate in the project.

The prototype plant will establish the technical and economic feasibility of producing electricity and hydrogen from coal (the lowest cost and most abundant domestic energy resource), while capturing and sequestering the carbon dioxide generated in the process. The initiative will be a government/industry partnership to pursue an innovative ‘showcase’ project focused on the design, construction and operation of a technically cutting-edge power plant that is intended to eliminate environmental concerns associated with coal utilization. This will be a ‘living prototype’ with future technology innovations incorporated into the design as needed.

The project will employ coal gasification technology integrated with combined cycle electricity generation and the sequestration of carbon dioxide emissions. The project will be supported by the ongoing coal research program, which will also be the principal source of technology for the prototype. The project will require 10 years to complete and will be led by the FutureGen Industrial Alliance, Inc., a non-profit  industrial consortium representing the coal and power industries, with the project results being shared among all participants, and industry as a whole.

Market Clearing Price Energy (MCPE) – MCPE consists of a floating price (a price that goes up and down depending upon the current market) and the required balancing of power at a particular Congestion Zone of ERCOT.  Congestion Zones are formed by the level of Commercially Significant Constraint (CSC) - A constraint in the ERCOT Transmission Grid that is found to result in Congestion which constrains the free flow of energy to a commercially cost significant amount. MCPE pricing has a availability portion of its makeup that is not completely definable. The MCPE price is established by ERCOT every 15 minutes. When sold by an Electric Company\REP, the Retail Electric Provider price is this wholesale price plus an “adder”.      

The MCPE rate is formed as: MCPE price + Adder = Price of Retail Electric Power     

This adder consists of the pass-through ERCOT charges for system reliability, costs associated with services that relate to system integrity and the margin for the REP’s overhead and profit. MCPE is, basically, a “cost in addition to” pricing of energy. If the cost of raw material remains fairly constant, this pricing is the most economic over time. Raw material price spikes as well as Congestion Zone issues, however, can defeat the economy of MCPE pricing. However, Texas has less of a problem with congestion issues compared to other problem states like California due to a self-sufficient power grid and fair warnings from the California brownout failures.     Pricing strategies are dependent upon the cost of raw material (natural gas coal, nuclear, and wind power) and the wholesale electricity into retail electricity delivered to the commercial facility. Examples include a floating index based upon spot natural gas prices, hybrid formulations allowing a floating pricing agreement to be converted to a fixed price contract based on some defined criteria, and a time-certain period of floating prices on one part of a contract’s term and the balance covered under a fixed price. How the proposal is styled is not as important as the net effect of the pricing.To speak to a consultant about MCPE pricing for commercial business please contact Electricity Bid.  ��

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This is for Texas Consumers to let their voice be heard about what they do and do not like about the Texas Electricity Deregulated Market.  Good and Bad Opinions about Texas Electric Companies, Government Regulations, Government Regulatory agencies, and other topics can be posted here.