Higher Wholesale Power Prices Approved By Public Utility Commission

Photo by Sean Gallup/Getty Images

Higher limits for wholesale power prices were approved by the Public Utility Commission today.

The Public Utility Commission of Texas, which oversees electricity in the state, voted today to raise the limit on how much power providers can charge.

That price – known as the offer cap – happens when the grid gets stretched to capacity. It’s essentially the maximum amount companies can charge for wholesale power. Today the commission tripled the cap from its level of $3,000 earlier in the year to $9,000. (Earlier this summer the commission increased the offer cap to $4,500.)

The hope is that higher profits for generators will result in new power plants. The Texas grid is predicted to fall below its target level of power reserves in a few years, and with low profits for power plants right now, new plants just aren’t being built in Texas’ private, energy-only market.

Some consumer and trade groups are opposed to the change, as it isn’t clear what kind of impact the higher wholesale prices could have on residential customers. The Texas Industrial Energy Consumer group said in a memo to the commission that if the $9,000 price caps were in place during the long, hot year of 2011, it would have added 80 percent to wholesale power prices, an overall increase of $13.3 to $14 billion.