DALLAS–(BUSINESS WIRE)–Watts Guerra Craft believes that TXU and/or its affiliates may have knowingly overcharged certain residential electricity customers at commercial rates. TXU’s rate-overcharging practices may have affected thousands of unsuspecting Texas residential electricity consumers.
TXU was sued in a class action lawsuit brought in Travis County by owners or management companies of multi-family or housing dwellings/complexes located in TXU service areas, who were charged under a residential or “Business Classic” rate and were assessed sales taxes on electricity provided by TXU for any billing period after July 1, 2002. Thomas Crowson v. TXU Energy Retail Company LLC f/k/a TXU Energy Retail Company, LP, No. D-1-GN-07-003901, in the 126th District Court, Travis County, Texas. TXU later entered into a Stipulation and Agreement of Compromise and Settlement that settled that action.
Currently, Watts Guerra Craft believes that TXU may be subject to an additional lawsuit with regard to rate overcharges, as a different group of potential plaintiffs, residential customers, may have been overcharged in a different area of Texas.
Texas electricity is increasingly being sourced by cleaner energy sources. The data below is from the U.S. Energy Information Agency.
|Total Electric Industry
| Natural Gas
| Other Gases
| Wind & Other Renewables
Pre-paid electric plans are becoming more and more popular in Texas because they work well for both consumers and providers.
Retail electric providers are in the business of managing risk. Specifically, they must manage rate risk and default risk. Wholesale electric rates in Texas are not fixed. They fluctuate substantially hour-by-hour depending on the current demand for electricity and the current supply of available power in the grid.
Retail electricity providers sell fixed rate plans to consumers with terms of anywhere from six months to up to as much as 36 months. That means if there is a short term jump in electricity rates they are not immediately able to pass the cost increase along to their customers because they are bound by the customer contracts. They must factor in adequate margins when they price their fixed rate plans to consumers to protect themselves from that risk. They also use hedging strategies to protect themselves against sudden jumps in electricity rates.
Another major risk is called default risk. Basically, this is the risk of electricity consumers not paying their electric bills. In this event, not only does the electricity provider not get paid, but they still have to pay the producers of the power regardless of whether the customer pays their bill. Because of this many electric providers require either high credit scores or a deposit.
The theory is that poor credit scores mean a higher risk of default when it comes time to pay the electric bill. Prepaid electricity plans are often the best choice for credit challenged consumers because they require no credit check. They also offer the flexibility of month-to-month no contract electricity.
A recent look at Texas electricity rates 2012 thru 2002 show that rates are essentially the same today as they were a decade ago when inflation is taken into account.
Many consumers are hedging themselves by choosing longer term electricity plans, such as the 24 month plan offered by Champion Energy. The plan is currently the cheapest electricity in Houston for the 24 month time period. The TriEagle Eagle 24 plan is among the best Dallas electricity rates right now for 2 year contracts.
||Actual Rates (cents per kWh)1
|1 – Average across all sectors
TXU has unveiled a new Free Nights electricity rate plan in Texas. Many are wondering, however, if the plan is really a good deal for most consumers. After all, most people are sleeping at night not doing dishes, watching TV or doing anything else electricity intensive.
Consumers are pushing back as Austin electricity provider Austin Energy seeks an increase in the base electricity rate charged to Austin area consumers.
Unlike elsewhere in Texas, customers of Austin Energy don’t have a choice in electric providers. The rate hike is meeting opposition from many who are asking why rates in Austin are going up while electricity rates in Texas have been going down substantially in deregulated areas.
Many Austin Energy customers who live outside of the city are also asking why they are subsidizing the city of Austin who receives payment from Austin Energy for non-energy related expenses.
Electricity rates will only continue to head north for a lot of years to come making alternative forms of energy all the more important for meeting our future power needs. Our will need for fossil fuel derived electricity has come at a big cost to our ecosystem. Thankfully in recent years funding from governments, universities and forward-thinking power firms has led to breakthroughs in energy technologies that could bring about the implementation of highly efficient, environmentally friendly methods of powering our electricity needs. One of the promising technologies currently being studied is algae energy. Algae is grown all any place on the planet and there’s no practical limit to the quantity which will be grown.
Roughly half of algae’s weight is comprised of lipid oil which can be converted into biodiesel a fuel that burns clean and more effectively than petroleum. The key to generating energy from algae lies in the lipid oils that comprise almost half of the algae’s biomass. These oils can be converted to biodiesel which is cleaner and burns more efficiently than petroleum. This could replace any fuel that is burned to produce electricity. Algae can be grown anywhere provided it has access to carbon dioxide water and sunlight. There’re thousands of types of algae but it’s the pond scum form of algae that shows the most promise for being converted efficiently into biodiesel. Even better, the parts which might be not converted to biodiesel are suitable to produce fertilizer and feedstock.
Big corporations are slowly beginning to get on the bandwagon in researching algae’s possibilities as an energy source. A lot of the present research into algae as a fuel source is being funded by private corporations, not by governments or universities. Many proponents of algae as a bio-fuel source are frustrated in the lack of funding and attention directed at this by public institutions. For many the pace of research is frustratingly slow. They believe that there is an underappreciated opportunity to get out from under the heavy weight of oil dependence. Unfortunately oil is a big industry and it is still profitable for big oil companies to squeeze every last drop of profit from this venture before leaving it entirely.
Current shortages have driven oil prices up and continue to do so. Any business that has the opportunity to earn the same or more profits from having to handle less product will do so. The past century has been one of tremendous prosperity for human society. Such prosperity would not have been possible without the discovery and exploitation of fossil fuels. But this period in human history must eventually transition to one fueled by sustainable energy technologies. Because algae can be grown in every corner of the globe it has the potential to be a great equalizer when it comes to the geopolitical implications of energy. Today’s model of extracting fuel from one place in the globe and shipping it thousands of miles across oceans could be transformed to one of local production of algae to produce electricity and transportation fuel. This would mean more jobs in places where economic opportunity may be lacking today.
Using algae as biodiesel would have positive benefits for everyone.
ERCOT recently warned that a shortfall in the amount of electricity needed to support Texas electricity consumers in times of highest demand is likely. There are two trends leading to the anticipated troubles of the grid. There are multiple electricity plants that will be closing down in the near future and still others who will be delayed in coming online for the first time. The demand-side, on the other hand, will continue to increase particularly if the Texas economy continues to improve.
Texas consumers have already felt the impact of a loss in electricity capacity. In 2011 some 6 MW of electricity capacity was lost due to plant closings. The result was rolling blackouts in February. The problem was made worse when freezing temperatures caused mechanical failure at several power stations. Texas had to take the unusual step of importing electricity from the Mexican electricity grid.
ERCOT has taken steps to try to prevent a repeat of February 2011 when the grid was unable to meet demand and was forced to implement targeted blackouts. Working with the PUC they are seeking to update rules to allow for greater participation of contingent electricity sources in the event of an electricity demand emergency.
ERCOT is so concerned about the capability of the electricity system in Texas to handle peak demand that they have taken some unusual steps. They have approached the state’s transmission operators and asked for a thorough top-down review of current projects that are expected to be plugged into the grid over the next year. They need to have assurances that the assumed completion dates for projects that will begin feeding the grid are accurate. ERCOT’s chief executive cited new EPA rules among other factors as reasons why there is no margin of error when it comes to planning out the available capacity of the grid over the coming year.
ERCOT is being squeezed from all directions right now. The Texas electricity grid is being impacted by unusual weather conditions, new EPA rules, and a challenging economic background. 2011 will be remembered in Texas for weather extremes the likes of which have not been seen in living memory. Weather challenges faced by the Texas electricity grid started early in the year as February saw an ice storm that effectively shut down transportation and kept Texans in their homes where they switched on their heaters and demanded record electricity output from the grid. The record demand along with weather-related failures at certain key points in the power generation infrastructure forced ERCOT to implement controlled blackouts.
The pressure on the gird didn’t let up as the summer brought a near record string of 100 degree days. Once more, the Texas electric system skirted on the edge of capacity. In addition to the extreme temperatures, 2011 is also notable for the continuation of an historic drought in Texas as wells as unrelenting wildfires.
The troubles brought about by this unprecedented string of weather hardships are only compounded by the impact of EPA rules that have recently been announced. Many electricity plants will be closed down because the operators will not find it economically viable to update them to meet the new EPA rules. As the electricity grid struggles to meet demand these otherwise operational plants will be going dark. This is far from just a Texas problem. Concerns about how the rules will affect the reliability of the North American grid are being raised by the very group who is in charge of maintaining the reliability of the grid, NERC. The logistics of closing down many hundreds of plants even temporarily over a short time span are problematic.