Texas looks to protect lower electricity rates by encouraging new power plants

Electricity deregulation in Texas has gone much smoother than in some other states, helping to bring lower electricity rates for many businesses and residents. But Texas is facing some difficulty in meeting the continually rising electricity demand, as the state's economy continues to grow rapidly.

To help address the situation, The Austin American-Statesman reports that the Texas Public Utility Commission is hoping to raise the allowable price for electricity sold at peak hours.

Texas's electricity market places a cap on wholesale electricity, which helps control electricity rates, but also discourages investment in new generating capacity. By allowing higher prices in the near-term, the state should help keep lower electricity prices over the long run, particularly as the state's energy demand surpasses the capacity of its current power plants.

There is some disagreement on how much those prices could go up, but one member of the commission sought to make certain that electricity providers would not think to pass on costs to consumers immediately. Instead, the PUC wants any rate increases to come gradually as prices grow naturally.

As of September last year, the PUC reports that more than 3.1 million residents and nearly 550,000 small businesses were relying on alternative electricity providers for their power.