In December, Texas is expected to shift over from its already complicated system for managing the wholesale electricity market to one that’s even more complicated. If the new system works the way it’s supposed to work, computers will spit out distinct prices for wholesale electricity at thousands of separate locations all across the state. These prices eventually will trickle down into home electric bills.
When this new “nodal” system for managing the electric grid goes live, it will be one of the most expensive and complex of its kind ever created in America.
What’s unclear, however, is whether consumers will ever benefit.
Two of the state’s major newspapers examined that issue and others in separate articles over the Labor Day weekend. The articles outline the troubling implementation delays, the cost overruns and the lax oversight.
Industry supporters say the new nodal system will make the wholesale electricity market more efficient. But Geoffrey Gay, an attorney who represents cities in utility issues, told Laylan Copelin of the Austin American-Statesman that it also could open the door to a new sort of market manipulation. “The guys who can deal with the complexity are not you and me . … It”s companies with computer models,” said Gay.
Another troubling issue is the price tag. When first proposed, it was supposed cost less than $100 million. But as Purva Patel of the Houston Chronicle notes, it’s now expected to exceed $500 million. Texas consumers will end up footing that bill.
Is a policy analyst consultant for TCAP, a coalition of political subdivisions in Texas that purchase electricity in the deregulated market for their own governmental use. Because energy costs are typically a significant budget item to our members, TCAP is consistently looking for ways to save our members money, through cost-saving contracts, energy efficiency or demand response programs.