But scarcity is not the same thing as the near-complete collapse of the Texas grid resulting from freezing weather and fuel shortages.Ī large household in Texas with a lot of electric heating might have used 500 kilowatt-hours of electricity – that is, 0.5 megawatt-hours – during this very cold week. If it works, demand will fall, along with prices, and the grid will stay in balance. This mechanism is meant to send a price signal when demand is high, giving customers an incentive to conserve energy. 15, however, the commission triggered an emergency provision, ordering ERCOT to maintain its $9,000-per-megawatt-hour maximum all week. One megawatt-hour is roughly equivalent to the amount of electricity used by 330 homes for one hour.īy Feb. When cold weather arrived in Texas over Valentine’s weekend, prices on the ERCOT market rose to $9,000 per megawatt-hour – the maximum price allowable by the Public Utility Commission of Texas – for a few hours before falling. It was not designed for the severe and sustained shortages that arrived with the cold wave. That was how the Texas electricity market was supposed to work. And they can have some benefit, since they give electric retailers opportunities to inform customers about the value of energy conservation. But price spikes don’t normally last for very long - typically for a few hours and mostly during the summer. Even with the best communications from retailers, the prospect of lower electric rates may lead some consumers to discount the possibility of high or volatile bills.ĮRCOT’s wholesale prices will occasionally spike to very high levels, and customers who get their power through market-based contracts have to pay those high prices. In particular, some plans bill customers at fixed rates, while others charge varying rates that reflect wholesale market conditions.

They can choose to get electric service from a retail provider rather than staying with the local utility if they believe the retailer offers a better deal.īut when homeowners choose a provider online, they may not understand what they are signing up for. PJM, CC BY-NDĪbout 85% of Texans live in areas with retail competition. Retail competition allows customers to choose from their local utility or other suppliers. In retail power markets, companies resell power directly to customers. In wholesale electric power markets, generators compete to sell power to resellers.

Texas electric prices