Why Natural Gas Drives Texas Electricity Rates
Author: Bounce Energy
When the Public Utility Commission of Texas (PUCT) helped set up the rules for Texas electricity deregulation, they noted that ”...the market prices of generation will likely be set by gas-fired generation, and as such, it is appropriate to apply the changes in the market price of natural gas to the entire fuel factor in order to maintain the level of headroom in the price to beat.
Texas produces and consumes more electricity than any other state. However, according to the US Dept. of Energy, “Despite large net interstate electricity imports in some areas, the Texas Interconnect power grid is largely isolated from the integrated power systems serving the eastern and western United States, and most areas of Texas have little ability to export or import electricity to and from other states.”
So, it makes sense for Texas electric power generators to rely more on the supply of natural gas in our backyard rather than waiting for the next 1,000 tons of coal to roll in from Wyoming. Natural gas is also cleaner burning than coal and does not leave behind large amounts of cinder and ash that require proper disposal.
Natural gas is a valuable and relatively rare fuel commodity and is frequently uncovered when drilling for oil. So, its price is bound to a commodity in a very volatile market where prices are often shaped by world events. For this reason, it costs more to buy than coal, nuclear, and wind. Since electricity is not separated in the wires according to how it was generated, the price per kilowatt hour (kWh) is set to the price of the most expensive fuel used to generate it: natural gas. This is known as “the price to beat”.
Critics of the Texas electricity deregulation system have argued that the key to cheaper electricity is to build more coal-fired generation plants. Recent state legislation seeks to clean up Texas’ coal-fired generation. The combination of Texas House Bill 469 and key elements of Texas Senate Bill 2111 establishes a two-tiered incentive package for clean coal projects in Texas.
Coal-fired generation projects capturing at least 50% of their carbon dioxide emissions are eligible for sales tax exemptions for the equipment that captures, transports, and stores their carbon dioxide. It also gives local taxing authorities the option to defer taxes in the early years of a project’s development. The first three projects that can achieve a 70% carbon capture rate will qualify for an additional bonus – a 0 million per project franchise tax credit. Of course, these conditions require generators to meet stringent air emission standards for nitrogen oxides, sulfur dioxide, particulate matter, and mercury.
However, over the past year, the price of natural gas delivered to electric generators has fallen dramatically. In fact, some US Department of Energy (DOE) analysts believe current natural gas prices now add an incentive for electricity generation companies to retire their coal-fired systems with newer natural-gas-fired generation. This is especially true due to the advent of combined cycle natural-gas-fired electricity generators.
Combined cycle generators use a gas turbine (similar to a jet engine) to spin and generate electricity. The waste heat from the turbine is used to heat water and create steam. The steam is then used to spin a steam turbine, thus generating even more electricity. These systems function more efficiently than typical coal-fired units, consuming fewer BTU of fuel per kWh of electricity generated.
Back in July, 2008, gasoline spiked to over .00 per gallon. Natural gas prices spiked as well and so did electricity. Consumers cut back on their travel and have continued to do so since. This helped drive down the price of oil, gasoline, and natural gas. In some parts of the country facing tough times, businesses have laid off workers or shut down and are no longer using natural gas to heat their buildings or need electricity to power their machinery.
Now, there is a huge surplus of natural gas. The DOE’s EIA also reported in its weekly natural gas storage report that:
“Working gas in storage was 3,204 Billion cubic feet (Bcf) as of Friday, August 14, 2009, according to EIA estimates Stocks were 562 Bcf higher than last year at this time and 513 Bcf above the 5-year average of 2,691 Bcf.”
That’s an awful lot of natural gas. And what most consumers will want to know, a high supply means natural gas prices and Texas electricity rates—will be low.
In fact, since January 2009, Bounce Energy has cut its prices 7 times.
And possibly, because of this ballooning 5 year storage level high, prices may continue declining through fall.
Article Source: http://www.articlesbase.com/news-and-society-articles/why-natural-gas-drives-texas-electricity-rates-1316644.html
About the Author
Bounce Energy is a Texas Electric Company based in Houston. Bounce Energy's goal is provide more than low Texas Electric Rates to our customers. With innovative and flexible plans, excellent customer service, and superior customer rewards, Bounce Energy offers a unique approach to Texas electricity.
How do you hook up a gas generator? I am thinking of buying a portable gas generator to provide electricity?
when the electricticy goes out. I live in an area that recently experiences an ice storm and we were without power for about a week. I want to get a generator that will deliver enough power to keep my furnace, major appliances and a few lights, etc. working. My question is, how is this generator hooked up to the furnace and other items? Run into fuse box. junction box? Does it come with extension cord/s? How is it hooked up…installed? Thank You
How do I use my gas-powered generator for electricity for my backyard workshop?
The building was originally wired for electricity. No simple way exists to run a power line from the house to the workshop, which we moved to its present location a year ago. What I want to do is attach my 5,000-watt generator to the wiring in the building (small: 16X20). Currently we run extension cords outside to the generator. Obviously the generator would remain outside, but with the building wired to it instead of extension cords through the doors and windows. Thanks for your help and advice on doing this.
Non-gas electricity generators?
Does any one know of a non-gas powered electricity generator that could power something bigger than just a lamp? Power a computer, or even a fridge?
How is natural gas piped to houses when the electricity is out?
I live in the south and a lot of people has natural gas generator for when the electricity goes out. How is it still supplied to the house? If there were pumps wouldn’t they be out too?
is it okay to bring a portable gas generator and a portable electricity Generator on a planeon a plane?
will the airport cops pass it through?
Wind generator.
Hydroelectric generators
Nuclear generators
Solar panels
Fuel cells
Is that enough?
Yes, if you took the short bus to school.
I am assuming your generator has circuit breakers to prevent overloads and is 240/120 volt with a 4 wire 240/120 volt receptacle on it. And that your shop has a 240/120 service panel in it. If I am wrong, disreguard this answer and give more details.
Hard wire your workshop panel to a non fused 30 amp 2 pole disconnect box mounted outside the shop using #10 wire, 4 conductors. Wire a #10-4 SO cord from the disconnect to a plug that fits into your generator.
you will require a generator with a 220 outlet. have a 10/4 cord (also known as cab tire) made up with the proper male end for the 220, a junction box, and a male dryer cord/plug. all available at home depot for 50 bucks. assemble into one cord. most important!!!SHUT YOUR MAIN BREAKER OFF. then shut all individual breakers off. plug the male dryer end into your female dryer outlet. plug into your 220 on the generator and fire it up. turn on only the individual breakers that you want to power…not the main. you are now back feeding your panel and you will not suffer through a blackout. just be sure that the main breaker is off when you are running this way.
Natural gas is pumped along its pipeline distribution at natural gas compressor stations. These compressor stations are, in almost all cases, fueled by natural gas from the pipeline itself.
Electricity is used to drive the process controllers that regulate and govern the compressor and other critical variables so if the electricity goes out the ability to control the compressor would go out. Because of this, your question has a lot of merit.
Now for the “other half” of the answer. Most compressor stations are remotely located and electricity is not always available. To overcome this, small natural gas fired generators are almost always installed at the compressor station to generate electricity for process control, lighting, and other related needs. Even if electric energy is availalble, the gas fired generators are almost always also installed so the natural gas can safely flow regardless of electric energy availability.
Your question is a good one. As you can see the gas transportation companies have already thought this through to assure safety and delivery.