A new entry into Texas’ electricity market faces problems, says energy analyst Bill Peacock in an opinion piece in Texas Scorecard.
Iberdrola Texas entered the state electricity marketplace in July and purports to offer a renewable energy option that is affordable and produced entirely in Texas at Iberdrola-owned wind farms. The company says it offers fixed prices, no hidden fees and energy sourced exclusively from Texas wind farms, suggesting savings of $500 for customers.
But Peacock says the company's claims could potentially mislead customers and lead to confusion, starting with Texas Iberdrola only using Texas wind energy to power homes.
“First, this is a physical impossibility," Peacock wrote. "The electrons flowing through the electric grid are indiscriminate. No one can identify the source of the electricity powering one’s house. Iberdrola acknowledges this in a disclaimer: ‘You will not have energy from a specific generation facility delivered directly to your service address.’
“But even if you give the company a pass on this, the disclaimer shows that Iberdrola is not planning to provide '100% pure Texas wind energy' to its customers: Iberdrola Texas will match 100% of your annual paid usage with Renewable Energy Certificates (RECs) purchased from Avangrid Renewables Wind facilities or another wind plant in Texas.”
This means that instead of purchasing the energy to provide only Texas wind energy, the group plans to purchase renewable energy certificates," the analyst noted.
Peacock also challenges the claim that “competitively priced plans can save customers up to $500, and include 12-, 24- and 36-month options.”
Houston prices as of July 9 were: 11.9 cents per kilowatt hour for a 12-month contract; 11.8 cents per kilowatt hour for a 24-month contract, or 9.9 cents per kilowatt hour for a 36-month contract. Peacock notes that all are “higher than the average price of same-term, non-100% renewable offers from other providers in the Houston area.”
He writes that it is possible consumers might save $500 by switching, but it’s more likely that they’ll pay more.
While the Spanish company is buying electricity from the Texas market, it does have more costs than other companies – including the renewable energy certificates that cover “100% of their customers’ use to cover their “pure Texas wind” claim.”
This means that they’ll struggle to be competitive in the local energy market, Peacock says..
