Changing How Texans Pay for Power

Dave Fehling / StateImpact

Power plant in Limestone County

Texans can add one more item to the list of reasons to love the state: It has the best market for electricity. Anywhere.. At least, according to Donna Nelson. She’s chairman of the Texas Public Utility Commission.

“It’s arguably the most successful in the world,” Nelson told attendees at the IHS energy conference in Houston.

Critics of the deregulated Texas power market would certainly challenge that assertion. And Nelson made the comment as part of a panel discussion that focused on a problem with the market: It might not make enough electricity to keep the lights and air conditioners running on the hottest days. Not enough new power plants have been built.

The president of power generator Calpine, Thad Hill, told the group that Texas needs to change to what’s called a “capacity market.”

“We’re very much advocating for a capacity market as the needed change in Texas. What a capacity market does is pays (power companies) to make sure you have generation that is available,” said Hill.

In a capacity market, customers would pay fees that would go towards the building of new power plants. Texas currently has an “energy-only” market that relies on the price of electricity to encourage companies to build more generation. The PUC has taken steps to allow the wholesale price to rise dramatically during peak demand periods like during scorching hot summer afternoons.

Dave Fehling / StateImpact

Donna Nelson at IHS CERAWeek energy conference in Houston

Nelson, the PUC chairman, said the commissioners would likely have enough data to make a decision on whether to pursue the capacity market concept by sometime this fall. But she wouldn’t say if she’s for it.

“I’m not at the position yet where I’m going to advocate one way or another, honestly. I’m just trying to get us to have an honest discussion,” Nelson told reporters at the IHS conference.