A new report from the consulting firm Wood Mackenzie suggests that this may not be a good time for state and federal mandates on renewable resources due to declining demand for electric power and new power plants scheduled to come online in the next few years, according to this article in the Houston Chronicle. No surprise there.
The Electric Reliability Council of Texas (ERCOT) - which manages 85% of the state's electric load - has released a report on the near-term impacts of proposed federal climate change legislation. Among other things, the report finds that if natural gas prices are $7 per MMBtu, the carbon allowance costs must be between $40 and $60 per ton to reduce carbon emissions in ERCOT generation to 2005 levels, resulting in an annual increase in wholesale power costs of approximately $10 billion.
A copy of the report can be found here, posted by the Texas Public Utility Commission.
Both the economy and tougher access to credit are having an impact on contract negotiations. According to this article in the Houston Chronicle, electric power retailers are more concerned today about customer defaults. As a consequence, rates for business customers may include risk premiums of $5 to $10 per megawatt hour, or as much as 1 cent per kilowatt hour. Retailers are also seeking address default risk by requiring larger deposits and using more limited term agreements.
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