Vol 31, Issue 47 Print Issue

New Group Calls for Capacity Energy Market

Grid technicians monitor screens at the Electric Reliability Council of Texas' new state-of-the-art backup control center in Bastrop.
Grid technicians monitor screens at the Electric Reliability Council of Texas' new state-of-the-art backup control center in Bastrop.

Four electric generators launched a political group this week, warning that Texas faces dire consequences unless regulators overhaul the wholesale energy market.

“Did you know Texas is on course for a power reliability crisis, with the potential for regular rolling blackouts in just a few short years?” the group, Texans for Reliable Power, said in a full-page advertisement in Thursday’s Austin American-Statesman.

The ad depicts a U.S. electric grid that’s fully lit, except for a Texas-shaped black hole.

“With low temperatures earlier this week, we narrowly escaped rolling blackouts,” it said. “We won’t be so lucky in the years ahead if we don’t take action now.”

The ad also cites the North American Electric Reliability Corporation — the nonprofit that oversees the nation’s power grid — which considers Texas among two U.S. regions “facing the tightest power reserve margins in the coming decade.”

 

The ad was a bit mysterious at first glance because the group did not list any contact information and does not yet have a website. (The domain texansforreliablepower.org was purchased in late December, but its owner has not developed it.)

Eric Bearse, the group’s spokesman, said that the group signed articles of incorporation early this week, and that it would soon provide the public with more information and launch a website. 

Four major electric generators — Next Era, Calpine, NRG and Exelon — currently chair the group’s board, Bearse said.

At issue is whether Texas should shift its current “energy only” market to a “capacity” market, which would pay power plants to maintain excess capacity to have on hand when the state’s energy demand soars — usually in blistering weather — or if other plants go offline. 

Consumers would ultimately bear those costs, which some analyses have pegged at $4 billion per year. Capacity market proponents, however, say the switch would drive down prices in the long run. They say it would boost reliability, reduce the costs of outages and stabilize the market, lowering the costs of capital.

“Our message is about the long-term reliability to the gird,” Bearse said. “The question is not a matter of if, but when, if we don’t have large structural changes to the market.” 

The question has pitted electric utilities against consumer advocates, industrial energy users and, most recently, the powerful oil and gas industry

Several lawmakers, including state Sen. Wendy Davis, D-Fort Worth, her party's presumptive nominee for governor, have also expressed skepticism.