Texas electric prices continue to fall along with other energy commodities, and it's still a good time to lock-in a low, fixed electric rate.
Electric prices have been falling with the price of oil, which has lost nearly two-thirds of its value since the summer, and is now trading just above $50. According to news reports, OPEC will probably wait until mid-December to decide whether to cut output. That means Texans still have a window to shop around and find a cheaper electric rate before any tightening of the oil market. Some analysts see oil sliding to $40/barrel absent a reduction in output.
Meanwhile, market reforms in the wholesale Texas electric market have suffered a setback as the state's grid operator, ERCOT, announced a new "nodal" market meant to combat the volatility in prices seen this spring will likely be delayed until December 2010. That's nearly two years later than the original start date of January 2009. The price tag of the market design has also doubled, to $660 million, though the new market is expected to produce consumer savings of about $6 billion.
The bad news for consumers is that a repeat of this spring's extreme volatility in electric prices, which saw wholesale prices reach into the thousands of dollars per megawatt-hour, may still be lurking around the corner until the new market is eventually implemented in 2010. However, due to the ballooning cots of the project, Texas regulators and politicians are taking another look its cost-benefit ratio, to make sure it will still benefit customers overall. Thus, the project's future completion is dependent on a new cost-benefit study due in mid-December.
One of the main reasons for this spring's high prices was "congestion" on the state's electric wires -- just like having too much traffic on the road. The congestion kept cheap wind power from West Texas from flowing into populated areas like Dallas and Houston. As a result, consumers in those areas had to be served with more expensive power generated closer to the cities, which raised Texas power prices to unseen levels.
The new "nodal" market is intended to combat such congestion by pricing power differently. Under this nodal structure, there will be more transparency into congestion, which will let power companies mitigate its effects. Currently, ERCOT and electric companies can't always see congestion in real-time, which means they can't change their operations to reduce energy prices. By making congestion more easily detectable, the resulting higher prices may be mitigated.