AUSenergy News Update 12/03/2014
Dec 3, 2014

In today’s AUSenergy News Update: New source of oil in Mexico’s region of the Gulf, FERC approves settlement over 2011 blackout, and more class action suits leveled against retail suppliers.

New Frontiers: Tapping Mexico’s Gulf of Mexico oil reserves

Summary: Mexico enters the oil industry with Pemex looking to drill in unexplored deep-water areas of the Gulf of Mexico

AUS Comment: The prospective 113 billion barrels of oil resources to be gained will draw U.S. oil companies who want to work with Pemex’s infrastructure for their own benefit. However, more drilling in the Gulf means placing the environment at future risk of oil spells, going after a finite resource instead of working to develop renewable, sustainable energy sources.

FERC approves settlement with grid operator CAISO over 2011 blackout

Summary: FERC approves settlement under which the California Independent System Operator will pay $6 million in penalties and reliability enhancements for its role in the blackout of 2011, which left more than 5 million people in Southern California, Arizona and Northwest Mexico without power for up to 12 hours.

AUS Comment: If a properly supervised program of demand response had been properly implemented during this time, it would have maintained grid reliability and prevented this 2011 energy blackout. AUS firmly believes that both businesses and utilities win when demand response is used to provide energy backup for the grid.

More Class Action Suits Filed Against Retail Suppliers Solely Over Whether Pricing Was “Market-Based.”

Summary: Newly filed suits allege that suppliers said their rates would be market-based, but actually exceeded the utility rate or were increasing when wholesale prices were decreasing. However, looking closer, the T&C’s clearly stated that rates “will vary based on several factors, including but not limited to, market conditions, operations costs, and other factors,” explicitly providing that the rate is not solely market-based as the suit would allege, but also based on, “operations costs, and other factors.”

AUS Comment: Courts, as well as consumers, need to understand that market conditions fluctuate constantly and that a rate that is higher than the utility price today may be lower tomorrow. Once again, it becomes apparent just how important it is to closely review and understand designated terms and conditions set forth by each supplier.

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