In December Texas is expected to shift over from its already complicated system for managing the wholesale electricity market to one that’s even more complicated. If the new system works the way it’s supposed to work, computers will spit out distinct prices for wholesale energy sold at thousands of separate locations all across the state. These prices eventually will trickle down into home electric bills.
When this new “nodal” system for managing the electric grid goes live, it will be one of the most expensive and complex of its kind ever created in America.
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| Copelin |
What’s unclear, however, is whether consumers will ever benefit.
Two of the state's largest daily newspapers explore that question and others in articles over the Labor Day weekend about the proposed nodal system. The articles outline the troubling implementation delays, the cost overruns and the lax oversight.
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| Patel |
Industry supporters say the new system will bring new efficiencies to the wholesale electricity market. But Geoffrey Gay, a Lloyd Gosselink attorney who represents cities in utility issues, told the Austin American-Statesman it also could open the door to a new sort of market manipulation. "The guys who can deal with the complexity are not you and me . … It's companies with computer models,” Gay told Statesman reporter Laylan Copelin.
Another troubling issue is the price tag. When first proposed, the nodal system was supposed cost less than $100 million. But as Purva Patel of the Houston Chronicle notes, it’s now expected to exceed $500 million. Texas consumers will end up footing that bill.
"Deceptive Shades of Green"
ReplyDeleteRegulatory/legislative "capture" only represents a small percentage of the underlying issues involved in nodal. One needs to examine the misinterpretation of the nodal market design as a component of green technology. As a college student, I frequently run into green-minded policy activists. This misconception that nodal, smart metering, and smart grid will serve as major drivers for energy savings in the future is in full swing.
So not only are consumer advocates faced with having to create a model of electricity price determination to counter questionable notions about deregulation's economic benefits, but these individuals also must address the fallacy utilized by deregulation's purveyors which mistakes correlation between smart technologies and huge environmental benefits, for causation.