The February winter storm that exposed weaknesses in the state’s electrical grid, leaving much of the state’s residents to deal with subzero temperatures without electricity, could soon be overhauled.
According to Peter Lake, chairman of the Texas Public Utility Commission (TPUC), Texas is on track to undertake a monumental redesign of the Texas electricity market.
“Since capacity markets force customers to bear the risks of bad investments, a longer forward period that relies heavily on speculation could result in customers paying for unneeded capacity as conditions change. Like all electricity markets, capacity markets face very real limitations when it comes to fortune telling. The difference is that, in a capacity market, the costs for over investments are borne by customers rather than generators and the decision to over invest is made by a handful of regulators rather than of millions of market actors responding in real-time to changes in supply and demand," according to a Texas Public Policy Foundation report by policy analyst Kathleen Hunker.
Renovation of the system would be geared toward bringing in competition, along with market prices, that used to be the stalwarts in Texas' energy system.
The objective would be to keep prices affordable through the construction of state of the art generators and not passing the cost to consumers.
"The lights are gonna stay on and your bill should not change. Our goal is to reallocate the payments that are currently being made to their most reliable source of power," Lake said.
He added that the TPUC and ERCOT aren’t expecting to raise costs, instead they are focusing on paying for power generators that could provide electricity in a reliable fashion.
Lake also said the "private investment community is waiting to see what a new framework will look like," suggesting "a need for incentives to maintain existing generation and attract new investment."