Texas to spur energy development with more open electricity rates

Texas hopes that it could make use of its electricity deregulation policy itself to help spur electricity companies to add greater generating capacity, according to StateImpact.

The state makes use of a policy known as rate caps, which put a fixed limit on the amount of money that electricity companies can charge utilities and electricity suppliers for power.

At $3,000 per megawatt, the price generally sits well below that, but the stifling heat that Texas suffered through this summer regularly drove up electricity prices, as more and more homes and businesses turned on the air conditioning, leaving the state with little generating capacity remaining.

However, regulators believe that electricity deregulation and the competitive electricity rates that come with it should already serve to encourage investment in infrastructure, with regulators needing only to raise that cap. While this could lead to higher electricity rates for some, particularly at peak hours, it would mean an ultimately more reliable and sustainable electrical grid.

Through August of this year, the U.S. Energy Information Administration reports that electricity prices actually dropped in Texas from the year before, despite the surge in energy demand.