HB16: Texas To Ban Residential Wholesale Energy

March 18th, 2021

HB16: Texas To Ban Residential Wholesale Energy

As of March 08, 2021, Texas lawmakers have introduced a bill to the State Affairs committee of the Texas House demanding a ban on wholesale pass-through rates to residential customers. 

The bill only targets “wholesale indexed products.” It does not address the very real concerns that led to the Texas Energy Crisis — lack of diversification in energy generation and proper preparedness for extreme weather events.

Texas lawmakers are looking to use the wholesale energy product as a scapegoat at the consumer’s expense. Octopus Energy will always offer other low-cost plans to our customers, but the wholesale plan gives residential consumers the choice to access the same rates as commercial and industrial consumers — this is the fairest rate for consumers who understand the plan.

What is wholesale index pricing? 

Wholesale index pricing allows a retailer to “pass-through” the market-rate cost of energy to consumers. This rate is offered with no markup, but can be subject to fluctuations due to market conditions, including grid demand. In other words, you’re charged the real-time cost of energy.

What are the benefits of wholesale index pricing?

Wholesale index pricing has many cost-effective benefits. For consumers, it allows them to control their household energy bills by saving money by choosing when to use energy. 

With wholesale index pricing, consumers can even be paid to use energy. Power prices can sometimes go negative when there is too much power on the grid, which means consumers are paid to use energy to balance it. 

This pricing structure can facilitate a more efficient energy market for regulators. By enticing consumers to use energy when it is cheapest, wholesale index pricing can relieve grid pressure during peak times — when energy demand is high — ultimately increasing the stability of the electrical grid for everyone. 

The wholesale index pricing resulted in massive bills for a lot of Texans. That’s why we need price caps.  

Retailers or legislators can establish price caps to protect customers from enormous price fluctuations. By setting a maximum price that consumers can be charged, retailers or legislators can better shield consumers from system-wide collapses or extreme weather events. At the same time, consumers can have peace of mind knowing their energy bills will remain reasonable no matter the circumstance. For instance, an individual who saves 45 percent on energy by doing their laundry at 10:00 A.M, an off-peak time, can be assured that even during extreme events, their savings will be protected by a price cap. 

Another option is to create an insurance pool, wherein a retailer adds a small surcharge — perhaps a dollar — to energy bills to help pay for energy bills in the most extreme events. With a price cap in place, the $17,000 energy bill becomes efficiently the same price as the normal state monthly average.

How can I get involved?

If you feel strongly about having the choice to access to a wholesale pass-through rate, we’re encouraging you to call or email your local representatives, at both the Texas House and Texas Senate, as soon as possible. 

Find My Representative

If you need assistance, please call one of our Energy Specialists at 844-386-5832 and they will help you navigate this website.

Make your voice heard.

Advocating for this index plan by contacting your local representative is the best way to convince them that wholesale index pricing should stay. Your voice matters, especially when it comes to state issues. The big utility companies lost power during the crisis, too.  Wholesale pass-through rates didn’t cause the grid to fail. Hold Texas lawmakers accountable, don’t let them ban something that doesn’t address the real energy crisis.

We can improve the wholesale plan with consumer price caps that protect the customers when things go awry. Don’t let Texas lawmakers limit your freedom of choice by banning it.

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