Electricity bills are high and expected to go even higher since Hurricane Katrina and Rita disrupted natural gas supplies. Houston Public Radio’s Capella Tucker reports consumers are seeing the increased prices faster because of the deregulated market.
Electricity bills could increase by as much as 14 percent if the Public Utility Commission approves the rate increase requested by Reliant. The PUC will vote on the request at the end of the month. PUC Spokesman Terry Hadley says discussions are already underway to phase in the increases.
Reliant is the incumbent provider in the Houston area and must go before the PUC before changing rates. Reliant’s competitors, otherwise refered to as retail electric providers, are free to set their own prices. Hadley says historically these providers do increase rates proportionately to what the incumbent provider does. How the recent spike in prices will affect these companies ability to compete is yet to be seen.
University of Houston Global Energy Managment Institute Director Craig Pirrong will be watching the market place and has the same questions about how the retail electric providers are positioned to handle the current price hikes.
Pirrong says even in a regulated market consumers would have eventually seen increased electric bills. It is happening quicker in the deregulated market.
So how high can prices go? Winter weather in other parts of the country may play a roll in that. Pirrong says this November through March will be the most sensitive period.