Do not fall for the Nodal Fees scare tactic.

November 7, 2011

Texas Power GridOn December 1, 2010, ERCOT did a complete revamp of the state’s electricity grid, switching from a “zonal” structure to a “nodal” configuration. The state’s grid went from having 5 zones to having over 4000 nodes. If the node that supplied electricity to your home or business needed more capacity, they could buy it from other nodes.

Many energy providers used scare tactics to try to get their customers to pay a higher /kWh rate that would have the Nodal Fees included, as opposed to staying on the lower rate and “risking” high nodal fees that would be tacked on to their monthly bill. The higher all-inclusive rates ran about half a cent higher than the rates that did not protect from the coming Nodal Fees, and you were locked into that higher rate for every month of your contract.

As it turns out, Nodal Fees have been a non-issue for the most part. A few months after the nodal system went into effect, Texas was hit by a tremendous cold front that knocked out a third of the state’s energy plants – something that had never happened before. Suddenly parts of Texas were experiencing rolling blackouts. At my house, we had two days of rolling blackouts, where we would have power for two hours, then lose it for 30 minutes.

So what did this once in a lifetime event do to the Nodal Fees? By and large, not much. Consumers in South Texas found a slightly higher bill than normal, but it was a one time event. The rest of Texas didn’t even notice. Some of our commercial clients had an additional 8¢ tacked on to their $1,200 monthly bill, but it was only 0.006% of their total monthly charge.

Another thing to keep in mind if you are worried about Nodal Fees, is that it’s not always a charge – it’s sometimes a credit. If your node sells spare capacity to another node, that income will be passed on to you, though it’s going to be a wee-tiny dollar amount.

In short, don’t fall for the scare tactics being deployed by some of the energy providers. Nodal Fees are not something to be afraid of.