ERCOT wants to increase its revenues — and it’s seeking another rate hike to make it happen.
In documents filed with Texas regulators, the operator of the state’s principal power grid seeks to hike the fee that finances its operations from the current 46.5 cents per megawatt hour to 55.5 cents per megawatt hour.
The nine-cent hike would be applied to wholesale power purchases, meaning that it won’t go directly into home bills. But it’s sure to trickle down anyway, and could increase your energy costs by 10 cents or more each month.
ERCOT, also known as the Electric Reliability Council of Texas, says it needs the extra money to pay for new technology-related projects and for other new responsibilities — including those mandated by federal regulators. It also says it needs the money to keep up with inflation.
But the fee, like a sales tax, is attached to energy consumption. So just as state revenues increase when more goods are sold statewide, so too do ERCOT revenues go up when energy consumption rises. The fee itself also has increased over the years — from 33 cents per megawatt hour in 2003, then later to 41.7 cents, and most recently to 46.5 cents.
This means that ERCOT already is raising more money today from this fee than it raised in previous years.
Consider that in 2009, when the fee was set at 41.7 cents, it generated about $128.5 million for ERCOT. In 2015, with it set at 46.5 cents, it’s estimated to have generated about $159.5 million. That’s about a 24 percent revenue jump.
The new fee structure would lead to about $193.9 million in revenues during 2016 and $197.5 million in 2017, according to ERCOT’s budget documents. That equates to a more than 50 percent increase in fee-generated revenues in less than 10 years.
The nine-cent increase also represents a more than 19 percent jump from the current rate, and a more than 65 percent increase from the 2003 rate.
ERCOT recognizes that this hike is substantial, but it insists it has — and will remain — a faithful steward of ratepayer money.
“ERCOT knows that it must manage resources carefully on behalf of market participants and Texas consumers who pay to support ERCOT’s operations,” it wrote in a filing at the PUC.
The Public Utility Commission is expected to make a ruling on the ERCOT budget later this year.
TCAP is a coalition of more than 160 cities and other political subdivisions that purchase electricity in the deregulated market for their own governmental use. Because high energy costs can impact municipal budgets and the ability to fund essential services, TCAP, as part of its mission, actively promotes affordable energy policies. High energy prices also place a burden on local businesses and home consumers.