Texas power providers seek fees to ensure generation reserves

• 10 years ago (2013-10-12)
• David Flin

Africa 306 Asia 860 Australasia 51 Biomass 8 Climate change 20 Coal 282 Cogeneration 1 Concentrating solar 5 Cyber security 8 Decarbonisation 1 Decentralised energy 5 Demand side management 2 Demand side response 2 Digitalisation 10 Distributed energy 10 Distribution 113 Electric vehicles EVs 4 Emissions 61 Energy management 1 Equipment 2 Europe 1069 Gas 379 Gas engine plant 62 Gas fuel 2 Horizon 2 Hydroelectric 17 Hydrogen 56 Hydropower 116 Latin America 77 Maintenance 3 Marine 1 Metering 2 microgrid 5 Middle East 317 North America 1004 Nuclear 643 Offshore wind 119 Oil 18 Operations 4 Policy 8 Regulations 3 Renewables 758 smart grid 2 Solar 250 Storage 41 substation 8 Tepco 2 Tidal 2 Toshiba 4 Transmission 181 US Senate Washington 4 Wind 241

---

Electricity providers in Texas have said that they should be paid by households and businesses to ensure that there is enough generation capacity to meet peak demand. The Texas Public Utility Commission (TPUC) is considering rules that would overhaul how the main state power market managed by the Electricity Reliability Council of Texas operates. Instead of relying solely on electricity prices for profits, providers would also receive fixed payments from consumers to build and maintain supply. These capacity payments would largely go to plant owners.

Thad Hill, President of Calpine, said: “Capacity markets don’t cost more, are far more reliable and stable than other market designs. Calpine would not invest hundreds of millions of dollars into brand new capacity. We think that is true of other investors as well.

Generators have been seeking a capacity market as a way to recoup costs following a 73 per cent drop in the price of natural gas, which drove electricity prices lower. Last year, the TPUC responded by raising the cap on wholesale power prices to $4500/MWh, from $3000/MWh, with the limit rising to $9000 in June 2015.