Last week, SaveOnEnergy.com noted that even with a stay of federal environmental regulations, which will keep more Texas power plants online this summer, Texas electric rates are still likely to rise because the supply of generation only marginally exceeds forecast demand.
One of the reasons for this is the prolonged drought Texas has experienced, and its impact on power generation and electricity production, which was examined by the state senators earlier this week. Even recent heavy rains in some parts of the state, including Houston, have not eased the statewide drought conditions.
Many types of power plants rely on large amounts of water for cooling, and without adequate water, these plants cannot generate electricity.
"The drought is already having a 'slight impact' on electricity generation, according to testimony from Trip Doggett, the chief executive of the Electric Reliability Council of Texas (ERCOT), which operates the state's electric grid. He anticipated that problems would remain slight through the summer, but if the drought continues into next year, 'the consequences are likely to become more severe,'" the Texas Tribune reported.
If power plants are unable to obtain cooling water due to the drought, that means they could be forced to reduce operations or shut down completely. With such a small margin in excess power capacity currently in the state, even small reductions in generation due to the drought could have huge implications in both reliability and market energy pricing.
This summer, Texas saw wholesale prices routinely hit the price cap of $3,000 per megawatt-hour (the equivalent of $3 per kilowatt-hour) even before the drought affected most plants. If Texas has a repeat of last year's extreme heat, coupled with the continued drought, electric prices may spike even more repeatedly, which will drive up retail electric rates.
That's why it's important to shop for a low electric rate now, while low rates are still available. Electric rates are still at historic lows, and shopping for a new energy provider now means customers can avoid any future price increases.
Electric providers competing for customers are still offering rates as low as 8 cents per kilowatt-hour -- less than what electricity cost 10 years ago -- in both the Dallas and Houston regions, making now the perfect time to shop.