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15 years after deregulation, reliability of grid becomes issue

Texas has the only competitive electricity market in North America without a capacity market. Since 2002, when the state deregulated electricity, Texas has relied on price spikes, euphemistically called “scarcity pricing,” to make it worthwhile for companies to keep extra generating capacity at the ready.

On the hottest days of summer, soaring demand can create temporary shortages in wholesale markets, driving prices from an average of $25 a megawatt hour into the thousands of dollars, leading to a lucrative payoff for generators able to quickly supply the market. Consumers are often insulated from these spikes, but the higher costs eventually filter down to their bills.

This system has shown cracks over the years, leading the Public Utility Commission to lift a cap on wholesale prices three times — from $3,000 in 2013 to $9,000 in 2015 — to provide incentives to power generators to invest in their plants and maintain backup generation. In 2014, the PUC approved an additional surcharge to be paid to power companies when supplies are scarce.

“ERCOT’S market only works if the price is right,” said William Hogan, director of the Harvard Electricity Policy Group, which studies competitive electricity markets.
 

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We deregulated power generation but kept distribution regulated. Try to run new power lines and you'll run into all sorts of NIMBY roadblocks, even if you're using existing public right of ways that currently don't have power lines.

Also note the comment
leading the Public Utility Commission to lift a cap on wholesale prices three times
tells me the industry is still regulated. Unregulated industries don't have to get government permission to raise or lower prices.
 

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At one time I held shares in EnerNOC which has a huge database of customers willing to ratchet down their power needs (think Walmart, where they can turn off half of their lights in any given area) to help power companies ride through these spikes. I've since sold it all off, but it's an interesting concept to be able to quickly ramp down consumption if necessary.
 

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At one time I held shares in EnerNOC which has a huge database of customers willing to ratchet down their power needs (think Walmart, where they can turn off half of their lights in any given area) to help power companies ride through these spikes. I've since sold it all off, but it's an interesting concept to be able to quickly ramp down consumption if necessary.
That's being done in many of the Texas markets. Here in San Antonio, it's being done for both residential and commercial customers. My job's campus participates as well as me and several of my co-workers in their homes.

Our utility just installed a new Nest (Gen3) thermostat about 10 days ago (for free) to replace the old (5 yrs. old) Honeywell unit that they were using before. It's still learning our fluctuating lifestyle to develop the best temperature schedule.

The feature I've been most impressed with is the Home/Away Assist which ties to our phones to tell it when we're not home and adjust accordingly. The part I miss the most is the whole-house usage information that the Honeywell unit provided - since it was tied to the meter and captured that data. That was particularly useful when chasing down different loads that you might not have recognized without the data to point it out.

With the thermostat as a gateway, I'm looking to now add other Works-With-Nest products in the near future.
 

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We have Nest and love it. I can change temp with Amazon's Alexa and also have Big Ass Fans (Haiku) that work with Nest and Alexa. I can even change Nest temp with my Logitech a/v remote. We have solar panels, so if costs do increase, they will pay for themselves even faster :) Might even justify battery storage down the line if prices increase 3x. Most people in Texas pay well below the national average for electricity (most smart ones anyway).
 
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