Texas power retailers face tight supply, higher $5,000 price cap


Tue Jun 4, 2013 4:01pm EDT

* Texas real-time price cap up from $3,000 last summer


* Generators could benefit, retailers could be exposed

* Grid agency preparing for tight supply this summer

By Eileen O'Grady

HOUSTON, June 4 (Reuters) - Companies that sell electricity to homes and businesses in Texas face paying 66 percent more for wholesale power during times of extreme heat this summer if supplies are thin after regulators raised the wholesale price cap to $5,000 per megawatt-hour.

The increase in the price cap for real-time power - used to balance supply and demand - to $5,000 per MWh went into effect June 1, up from $3,000 for much of last summer.

Power-plant owners stand to benefit from the higher price cap. But, it threatens to hurt electric retailers that may be unable to pass on higher costs because many consumers are protected from price volatility by fixed-rate contracts.

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