ERCOT considers request to raise rates

TEXAS - The Electric Reliability Council of Texas, which operates most of the state's power grid, could request a 34 percent hike in fees it charges wholesale power providers for 2009.

The higher fees, when passed along to consumers, could boost utility bills for the average household by about $9 a year. The money would go toward hiring staff and installing technology for a new grid system.

The Public Utility Commission must approve fee increases for ERCOT. A fee hike would require a formal rate case before the commission, giving Texans a chance to formally protest the fee. The PUC chairman has already expressed misgivings about higher costs.

"We have an obligation at the commission to scrub the numbers and ask hard questions," PUC chairman Barry Smitherman said of a potentially higher budget request.

Still, Mr. Smitherman agreed that ERCOT's shift to a new grid system is important to help Texans use energy more efficiently.

ERCOT posted information about potential fees on its Web site.

In the materials, ERCOT reminds the board, made up largely of utility industry managers, that "cost consciousness is key and ERCOT's ultimate constituency is the electric customer."

According to the materials, ERCOT is considering asking the commission to hike its fees to around 70 to 75 cents per megawatt hour from the current 56 cents.

The increase includes a larger budget to switch to a new grid system, fundamentally changing the way the grid operates. ERCOT plans to move from a regional system to a nodal system, made up of thousands of nodes that transmit information to the agency.

ERCOT and power companies can use the information collected at nodes to ease bottlenecks and to determine the best spots to build new power plants. The system could potentially ease power prices. Already ERCOT has said implementing the new system would cost $62 million more than expected, for a total price of $311.3 million. Part of the new fee would reflect that increase.

ERCOT would also seek more money to hire staff to manage the new system and to implement technology to support it, spokeswoman Dottie Roark said. She said the company's lease for its building will soon be up, so higher fees also reflect the various options ERCOT has for office space.

The fee proposal in the board materials is only preliminary, Ms. Roark said. ERCOT will come up with a firm budget in coming months and hopes to get board approval on May 20. The budget would then go to the PUC for final approval. The commission could deny the fee hike or alter it.