Many have asked if Texas provides a good variable market rate for commercial businesses. There are some definite savings available with a market rate. The savings come in greater if you know when it’s good to go after a heat rate product and when an MCPE product would be better.
The way you determine this is by looking at the historical natural gas heat rate and seeing if the current heat rate is in a good range to lock in at. If the heat rate is at a historically high level it would be good to look at other products.
Currently the historical data on MCPE pricing is very good in comparison to Natural gas prices. Electricity rates closely follow natural gas so this correlation is not too odd to consider. MCPE has averaged a couple cents lower than the average on fixed electricity rate contracts. For now it looks like Market Clearing Price for Energy offers an advantage over heat rate products.
The Market Clearing Price for Energy is a Texas variable electricity rate that is managed by the Electric Reliability Council of Texas. ERCOT is a non profit organization that manages the Texas electric grid. ERCOT has had its corruption issues in the past but at this time everything seems to be on the up and up. The PUCT which stands for the Public Utility Commission of Texas looks for discrepancies in the MCPE index price and if they notice something it can be challenged. Some wholesale energy companies that buy and sell on the MCPE market have been fined for what the PUCT considered price manipulation. Just last year one of the big brand energy companies were fined the highest fine the PUCT has every issued at 15 million dollars. The original fine was many times more than this but the PUCT usually will lower the fine amount if the company will cooperate in the investigation and participate in explaining their actions.
The MCPE market is susceptible to electricity price manipulation sometimes with that manipulation occurring on its own simply because of the regulations involved in bidding for electricity. The wholesalers who buy and sell on this market are disproportionate in size. Because of the monopoly size of some of the power generation companies price manipulation can be easily blamed on some of these larger electricity companies. The PUCT rules and regulations may soon change to alleviate the pressure on these wholesale energy companies so that they can bid without the scare that the PUCT may fine them for an unintentional act.