how does a high demand for power equate to a $10K power bill for either wholesale or civilian accounts? (TX)
In: Economics
I was looking at this all wrong. Googled what you’re talking about. So the people that have those ridiculous bills are on a wholesaler group provider, not a standard power company deal. So the wholesaler buys power, then sells it at market rate. But with the increased demand, from lack of insulation, and the abnormally cold for the last few years weather. The price per unit of electricity has skyrocketed. The news story gave one example of $9000 per unit on that market with a usual seasonal price of $50 per unit. This happened from the removal of all extra energy from the market to run heaters and what not, creating a scarcity of supply. Electrical prices paid from regular utility companies will probably double or more, but not get that ridiculous. There may also be some form of government help out in this situation. From what I’ve seen people on that system are urged to get off of it immediately even by that company itself. The guy that is in the story had his bill go from $150 to over $3200 for a month.
Short version, his supplier buys power at wholesale rates and resells to customers at a fixed percentage over market. Usually saving quite a bit of money. However, with unprecedented demand, the market rate shot up, and the company is working like normal, just with highly elevated prices.
Think of it like the egg shortage we had a while back if you want. You want three fried eggs, usually the price of a carton of 6 eggs is 50 cents. Someone buys the carton and gives you three, gives someone else three. Then they charge each of you 30 cents. They make a little money, and each of you customers get your eggs at least price than buying a whole carton and wasting the other three eggs. Now there is a shortage, that same carton now costs $5, same deal happens automatically. Now you pay them $3 for the same thing you used to get for 30 cents because the price shot up.
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