In what may be the first of several, two Texas retail electric providers have filed with the Public Utility Commission to relinquish their electric provider certificate and withdraw from the market. Meanwhile, a new report from Standard & Poor's Ratings Services says that small retail electric providers, "may have trouble surviving" in the Texas energy market.
SaveOnEnergy.com has alerted Texas electric customers over the past few weeks of the precarious financial situation that some of the electricity providers may be in, due to the extreme heat and the volatile wholesale energy pricing during August, and that customers should check to make sure that they are with a financially stable electricity company.
Now come tangible signs of these problems. Two Texas retail electric providers -- Pocket Power (organized as Monongahela Communications LLC) and Chain Lakes Power (which traded as Simple Power) have filed to relinquish their supplier licenses at the Public Utility Commission. Each of these companies has sold its customers to a competing electric provider. The Simple Power customers were actually sold back in May, but Chain Lakes Power had nevertheless retained its certificate and authority to serve customers, but has now decided to completely exit the market.
Worse, Standard & Poor's expects to see more Texas retail electric providers going out of business in the future, due to volatile wholesale energy markets which strain retail providers' balance sheets.
Standard & Poor's, "expects that as a result of high wholesale power prices and price volatility many retail power suppliers could report declines in cash flow for the year. In fact, some power retailers in the region are already exiting the business."
"The prolonged heat wave [in August] led to two periods of very high wholesale prices for the grid operator, and day-ahead, on-peak wholesale power prices for August 2011 rose far above the range of prices during the previous years. Expectations of a continuing supply shortage drove a rare sustained increase in prices in ERCOT's day-ahead market," S&P added.
"A seemingly inevitable shake-out in ERCOT's retail power market is slowly but surely underway as smaller players begin showing signs that operations are untenable. Given the increasing incidence of extreme weather events in ERCOT, we're convinced that retailers lacking in power-generation assets may have a long run of small gains, but in the end they may have trouble surviving," S&P concluded,
Customers need to protect themselves from this "shake-out" and ensure that they're with an electric provider which is financially sound and secure.