scrubbedexpat091

Can someone from Texas explain the debacle around the high electric bills in Texas and people reportedly being charge crazy high amounts.

Being in a place where rates are set and don't fluctuate, I am not fully understanding how it works in Texas and why people are suddenly being hit with massive bills.

I know probably simple answer, but I never lived in Texas and I am not fully understanding it all and clearly missing something from the picture.

tom169

Not a Texan but read the news articles - some things I say may be slightly wrong.

They have a deregulated energy market where you can find your own supplier. Some people chose suppliers that offered the wholesale price (with a small monthly fee).

During the winter storm a lot of the grid was unavailable for one reason or another. This reduction in supply and huge demand to heat homes (mainly using electric heat pumps) caused prices to rise (simple economics).

This was compared to a similar event many years back in California.

civilservant

It surprises me that most southern states are not this way, what with the R view that competition is a good thing. But no, we here in GA are locked into the supplier in our area, even if the prices 2 streets down (across a county border) are somewhat cheaper than ours.

Still, if this is the end result, I'll stay where we are.

tom169

It surprises me too. I should add because people chose wholesale pricing there was no price protection and the cost per kw/h went through the roof - I think something like $0.02c to $9.

It sounds like NC is the same way as Georgia. Duke energy is a major supplier and then throughout the state there are some smaller ones.

Lion in Winter

Some Texas suppliers seem to use a "surge pricing" model.

https://www.forbes.com/sites/jonatha...h=57768e9958ba

Having said that, I would disagree that it's "simple economics" in the sense that it's a corporate strategy to make more money when the demand is highest, rather than something that "just happens". Presumably, this is what they do all the time and the storm simply produced an exaggerated effect and called attention to it.

robin1234

I assume Texas is still in the eighteenth century. It’s either the Invisible Hand, or the Tragedy of the Commons.

Lion in Winter

I thought maybe it was the Schleswig-Holstein question. Most things seemed to be, when I was doing history.

scrubbedexpat091

Interesting.

We have 1 electric company for the most part (with a couple small exceptions) BC Hydro, they are owned by the provincial government as the sole shareholder, rates are set to be as low as possible while providing sufficient revenue to cover operating costs and capital projects. Rates are set by BC Utilities Commission.

We do have 2 tier pricing the first 1,350 kWh is $0.0930 once above 1,350 the rate increases to $0.1394 per kWh but we don't have any surge pricing or time of day pricing.

Note on the owned by the government, they are called crown corporations, and run independently of the government, they cannot be compared to government agencies, they are run like businesses with a CEO, board of directors etc, some of our crown corporations are run more efficiently and better than private companies are,,,,, ha ha

SanDiegogirl

As far as I understand it there are a variety of power suppliers in Texas and some offer 'plans' which have variable rates - rather tlike a variable mortgages the rate can go up and down depending on economic circumstances. Just like variable mortgages they offer 'tickler' rates to get you hooked, but during the storm period those variable rates shot up through the roof.

ddsrph

Texas opted out of the national grid to get away from government involvement/ control. But being the typical Republican Hippocrates they will welcome govt money from the national emergency fund to bail out business and homeowners from the large energy bills.

robin1234

Well, at least they offer decent healthcare plans, I assume..

Lion in Winter

But only after a good deal of muttering of oaths.

robin1234

That, and the theory of the four humours which sounds funny, but isn’t.

Lion in Winter

No. A bit bilious really.

tom169

Supply vs demand is the bedrock of economic theory.