Fixed-Rate Power Contracts in Danger
Officials at several big electricity providers are wondering out loud if changes in wholesale power prices could allow them to break the fixed-rate contracts they have with consumers.
TXU Energy and NRG Energy, which owns Reliant and Green Mountain, have asked the Texas Public Utility Commission if they could legally break the contracts due to possible changes in wholesale prices. Their thinking is that they can’t sell power for less than it costs them.
Under the current guidelines, companies are not allowed to break fixed-rate contracts unless power lines fees or new laws impose costs beyond the retailers’ controls.
The PUC has been looking at raising the wholesale cap of $3,000 per megawatt hour to $4,500 as a way to give power companies an incentive to build more power plants to feed the growing demand in Texas.
Even so, TXU says it doesn’t intend to break contracts because of the public backlash it would cause. Even so, TXU says it may have to reassess that position if the weather gets extremely hot, or if wholesale prices get too high. Other providers also don’t think fixed-rate contracts should be broken, for the same reasons cited by TXU.
So what does this mean for you? If the PUC allows electric companies to break fixed-rate contracts, you may be forced to have rolling black-outs right there in your house to save electricity and money. And buy a lot of candles.