Things are going from bad to worse, and even state regulators are taking notice. The Public Utility Commission on Wednesday, for the second time in two weeks, called for emergency action to cap escalating wholesale prices. The hikes have forced four retail providers out of business and pressured retail prices.
Again, as I noted last week, the system is broken, and we need to fix it.
How quickly have prices been skyrocketing? The Star-Telegram reports that wholesale energy generally sells for less than $100 per megawatt-hour, but 64 times last month some prices exceeded $2,250, which is the state price cap, and it exceeded $3,000 twice. By contrast, the highest such price spike in May 2007 was $1,084, and the highest price in May 2006 was less than $600.
Does anyone know why this is happening? Not really. The rules that govern wholesale pricing are incredibly complicated and "seemed to befuddle even the PUC commissioners" during a meeting this week.
Best guesses for the cause are a software glitch; the complexity of the grid and the regulations that govern it; and even fraud. One energy attorney told the newspaper that it’s possible some generators could be bidding power into the market in such a way as to cause congestion on transmission lines — and drive up prices.
