Consumer Advocacy Website, Texas Electricity Ratings, Releases Report on Motivations Behind the ERCOT Market Cap

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Texas Electricity Ratings, a consumer advocacy and eCommerce website for Texas deregulated electricity, has released an article examining the possible motivations behind raising the ERCOT market cap price ceiling. The work also examines what impact raising the cap would have on retail electricity providers, electricity generation plants, and everyday consumers.

Texas Electricity Ratings, a consumer advocacy and eCommerce website, has been helping to educate Texas consumers for years about how to best navigate the Texas electricity market and explain how big market changes effect everyday consumers. Their latest contribution, titled "ERCOT Price Market Cap Changes Appear Politically Motivated," examines the recent announcement by Donna Nelson and the Public Utilities Commission of Texas that they will explore increasing the market price cap on electricity on July 1st of 2012.

In addition to one cap increase this July, the Public Utilities Commission of Texas would also seek additional cap increases over a period of years until the cap reaches seven thousand five hundred dollars, more than double the current market cap of three thousand dollars.

As Texas Electricity Ratings explains, the move to raise the market cap is intended to draw new investments in energy generation plants to the state of Texas. Unlike regulated utilities, the Texas deregulated electricity market requires that new power generation come from private investment as opposed to public funds. The population of Texas has been and continues to increase rapidly and new generation plants will be needed in just a few years to meet the basic day-to-day electricity requirements of the state. With natural gas prices at all-time lows, new investment in generation has been at a relative standstill in Texas because new plants might not return desired levels of profit. Raising the market cap is a strategy that might convince investors to risk building new generation in Texas.

However, as Texas Electricity Ratings illustrates in their findings, raising the market cap doesn't ensure any new investment in generation. But it will guarantee higher prices for customers and increased risks for retail electricity providers as well as the energy generation plants themselves. There are also reasons to question the proposed timing of raising the market cap on July 1st and why that date might be politically motivated.

About Texas Electricity Ratings:
Founded in 2009, Texas Electricity Ratings is a shopping and consumer advocacy website that seeks to help Texans navigate the often confusing Texas deregulated electricity market. Texas Electricity Ratings seeks to educate and inform consumers about the options that exist in the deregulated marketplace through blog posts and consumer awareness programs on the internet. Additionally, consumers can visit http://www.TexasElectricityRatings.com to shop and compare electricity plans, leave reviews of their own experiences with various retail electricity providers, and research the comments left by other consumers to help customers find the best electricity provider for their needs. At Texas Electricity Ratings, when customers rate, everyone wins.

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Matt Oberle
Texas Electricity Ratings
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