A variety of stakeholders lined the hall on Floor 8 of the Travis Building north of the Capitol in Austin today to file comments with the Public Utility Commission on what changes — if any — are needed in Texas’s energy market to help keep the lights on. With suggestions that electricity demand is growing, and supplies dwindling, and a couple of high-profile incidents in 2011 when Texas came close to brown-outs or black-outs, stakeholders have been discussing these issues at the PUC and ERCOT — which runs Texas’ electrical grid and market — for a couple of years. And there are at least two camps. On one side, are a majority of the generators — Luminant, NRG and Calpine, but also Austin Energy and Xcel — who argue that without a new Forward Capacity market to pay generators not only for the energy they produce when they produce it, but also for the capacity they have or promise to have, there will be no incentive to build new generation to meet demand. Many markets in the US have such a capacity market, and it does provide extra cash to generators (as well as to demand response to lower demand), though actual new construction has been limited in most markets. On the other, are environmental and consumer organizations like the Sierra Club, Public Citizen, EDF and AARP, large industrial and municipal consumers like HEB, Shell, the Texas Industrial Energy Consumers and the Steering Committee of Cities Served by ONCOR — who are concerned about higher electricity prices and the potential that a capacity market will only help keep older generation units on longer, but not guarantee new generation. And perhaps another group — like CPS Energy, Golden Spread Electric Cooperative and GDF Suez Energy — who are not convinced a capacity market is needed, but are not opposed to some additional changes. Today was the deadline to respond to literally dozens of questions from Chairman Nelson and Commissioner Anderson — one a capacity booster the other a skeptic — on what we all thought.
The Sierra Club did file comments — some 25 pages long — that said: No capacity market needed — too expensive, too complicated and no guarantees. But we do think that some changes may be needed, and the best way is to do short-term competitive contracts through the Ancillary Service market at ERCOT. Since most of our “problem” is for a few hours a year on a cold winter morning or hot summer day, an extra Supplemental Reserve Service contracted a year in advance could help both those building peaking plants, or providing solar plus storage capabilities or those able to turn down demand could participate, helping to avert any issues before they arise. Other changes already occurring at ERCOT — such as allowing “loads” to bid into the energy market — and turn down demand when prices spike — should be allowed to move forward. The Comptroller of Public Accounts must begin rulemaking to adopt 2012 energy codes so that new buildings in Texas are energy efficient. PUC should adopt new rules on interconnection of distributed solar and require that excess energy be paid a fair market rate.
indeed, ERCOT is in the middle of redoing both their ancillary service market and their demand and supply forecasts and it may well turn out that there really is no big crisis at all. Actually the real crisis is that energy companies like luminant, NRG and Calpine are not making as much money as they would like!
Stay tuned for more in this ongoing saga. For a copy of our comments, see here..