From the Wall Street Journal:

Deregulation Jolts Texas Electric Bills

By REBECCA SMITH
July 17, 2008
 
Texas had some of the cheapest power rates in the country when it zapped most of the state's electric regulations six years ago, convinced that rollicking competition would drive prices even lower.
 

HIGH VOLTAGE The Problem: Consumers are getting gored by high electricity prices caused by rising fuel costs and mysterious transmission bottlenecks. The Background: Texas deregulated its market in 2002, but now prices are higher than ever. What's Next: Regulators are tweaking market rules and putting the finishing touches on a $325 million computer redesign to help bring relief.

This summer, electricity there is some of the nation's priciest.
Power costs are rising in the rest of the U.S., but everything is bigger in Texas: On a hot day in May, wholesale prices rose briefly to more than $4 a kilowatt hour -- about 40 times the national average.
 
"We could end up doubling last year's power prices," says Dan Jones, who monitors the market for the Texas Public Utility Commission to make sure it functions efficiently and is free of manipulation. A Texan shopping for electricity today typically would be quoted a price between 13 and 27 cents a kilowatt hour; the national average is between nine and 10 cents.
 
Beset by a combination of soaring natural-gas prices for power generators and congested transmission lines that weren't designed to accommodate the new freewheeling market, officials are struggling to figure out what can be done to bring prices back down in a state that consumes more electricity than any other.
 
"Are my constituents going to be screaming bloody murder in August?" state Rep. Will Hartnett, whose district includes parts of North Dallas, asked at a recent legislative hearing on the electricity market. "I'm worried about what's about to hit us."
 
More …
 

 
Electricity customers across North Texas are already complaining about their utility bills and most haven't received bills for the recent 100° days. Garland residents, at least the 85% served by GP&L, haven't been similarly hit because we own our own system and generation but we're not totally immune to the effects of the electric market. We are still a part of the transmission system that the Wall Street Journal article suggests is antiquated and describes as congested.
 
The article says the culprit is higher natural gas prices. Even though Garland, Bryan, Greenville, and Denton operate a coal-powered generating plant at Gibbons Creek as the Texas Municipal Power Agency, higher natural gas prices gives coal producers room to charge more for their product, too. Everyone is affected.
 
As covered in a recent Dallas Morning News article on wind power and my related post, wind is not an always reliable source of energy. Wind can be relied upon to blow when we don't need as much power (wee hours of the morning) and similarly to not blow when we do (during the hottest part of the day).
 
The state's cheapest energy comes from nuclear and coal. The state loses the savings from that cheaper energy when it is replaced by wind. The natural gas units that can spin the quickest and come online when wind dies are currently the most expensive units to operate.
 
The WSJ article says that as many as 100 retail providers are doing business in the state. That is deregulation.
 

GP&L continues to be the lowest provider in the Oncor/TXU area. Click graphic for larger version.

The public utilities have been forced to divide and sell divisions. Even TMPA that has its own generation and its own transmission lines cannot ship that power to its owners, Garland and the three other cities, except under control by ERCOT. Also, the state requires that 15% of power come from renewables even though it can be extemely inefficient and costly. Utilities are more handcuffed than ever. That's not deregulation.
 
I have some concern that a state agency totally reliant on a computer program to handle all the complexities of the utility business, generation by diverse methods and idiosyncracies, transmission over old and congested lines, has taken too much of the market out of the market.
 
Meanwhile, GP&L customers have the lowest-priced electricity in the area served by Oncor/TXU (see graph). GP&L is well positioned for the next several years.
 
There are opportunities for GP&L to benefit from the tumultuous climate that we call deregulation. To assist, the Council is currently working to fill the positions on the new Utility Advisory Board, which I believe will be a tremendous asset to the citizens, the Council, and to GP&L.
 
There may be dark clouds gathering but Garland and GP&L will remain one of the brighter areas.
 
[The original text of this post has been edited for clarity and brevity.]