Electricity Texas Now

Last week the Public Utility Commission (PUC) of Texas imposed a total of $3.7 million in penalties on two retail electric providers related to their default in 2008, which left thousands of customers “stranded” and forced to pay a very high energy price.  The penalties are a reminder of the dangers of going it alone when looking for a lower electric rate, as history has shown that not all electric companies are equally dependable and stable.

The PUC’s fines date back to the high prices experienced by Texas customers in the spring and summer of 2008, and the failure of two energy providers: National Power Co. Inc. and Pre-Buy Electric LLC.  Both suppliers, prior to running into trouble, had some of the lowest electric rates in the market, enticing customers to sign up with these firms.  However, both companies lacked proper internal controls and risk management processes to serve customers reliably.  When wholesale electric prices soared, these companies had not hedged their purchases in advance, and could not cover the exorbitant costs of serving their customers.  The end result was that thousands of these companies’ customers, who had been promised some of the lowest electric rates in the state, were shifted to the emergency “back-up” electric company, known at the Provider of Last Resort.  In some cases, the rates customers ended up paying for the emergency Provider of Last Resort service was more than double the rate they were promised from their original electric company.

Read the entire article at SaveOnEnergy.com.