Why Does TXU Want Texas to Raise the Price Cap on the Electricity it Buys?

[jmasterson]

From the Dallas Observer

Here's a question for all you MBAs in Unfair Park Land: Why would an independent retailer operating in a free, deregulated market want the state to take steps to suddenly raise the retailer's costs?
For example, say you own a mom-and-pop store that sells tomatoes. The government suddenly wants to increase how much you pay for your tomatoes. You won't see any more profit as you pass the higher price on to your annoyed customers. Do you go ahead and tell the state, "Hey, great idea"?

We ask because that seems to be what North Texas electricity retailer TXU did as the Texas Public Utility Commission contemplates a rule change that, as of August 1, would sharply increase the top price electric generators can charge retailers during times of peak demand -- during the dog days of summer, chiefly.

http://blogs.dallasobserver.com/unfairpark/2012/06/why_does_txu_want_texas_to_rai.php

This move by the PUC is going to result in electricity rates going up in Texas.

http://www.vaultelectricity.com/texas-electricity/texas-electricity-rate-increase-how-much-will-your-bill-go-up/

[mbperrin]

1. Energy Future Holdings owns TXU, Oncor, Luminant.

Luminant will charge much more, Oncor will pass it to TXU with a markup, and TXU will pass it to the public at a markup, making the owners of Energy Future Holdings a shitpile of money.

Those owners are:

Private equity firms KKR, TPG Capital, and Goldman Sachs Capital Partners . Ta-da!

The current cap is $3000 and is TRIPLE what FERC allows in the other 49 states, so the increase to $9000 is NINE TIMES the national cap.

Yeah, there'll be an increase, larger than any in the history of humankind, and all for us, Texas, just for us.

[jmasterson]

2. How much higher could they go

I don't know how much higher TXU rates could possibly go. Maybe if they spent a little less on TV ads... I can't watch a Rangers game without seeing that Free Nights ad 30 times.

[TexasTowelie]

3. Energy Future Holdings seized my gerbils, hamsters and ferrets

in an all-out attempt to corner the market!

Okay, I lied, but IOKIYAR.

Seriously though, when rent eats up 30% of the budget and electric is one-third of the rent then my share of the pie has gotten pretty small.