4 Texas Electric companies failing

As I was talking about a few weeks ago to my peers about this issue, 4 Retail electric providers went bust in a couple of weeks.

Fortunately, it has been small companies so far. However, Texas over-reliance on Natural Gas could prove a big problem in future years (Natural Gas closed at $13.02 on Friday, up from $7.60 a year ago, a whopping 71% increase)

Moreover, I strongly believe Natural Gas is currently under priced (on a Barrel of Oil Equivalent, NG is selling at $78/bbl), and within 2-3 years, we could see NG mirroring today's crude prices (say $15-$20 range per MMBTU).

There is an excellent article in the Chronicle that talks exactly about this:

"The electric market turmoil that brought down four electric retailers with more than 40,000 customers among them stems from a combination of factors: a rise in wholesale power prices, mostly because of a big run-up in the price of natural gas, Texas' main generation fuel; some companies' failure to hedge properly against those increases by entering into long-term wholesale contracts; and sudden price spikes that left them scrambling to meet financial obligations to the state's grid operator."

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