A debate on how best to address the state’s diminishing electricity reserves moved to the Texas Senate floor briefly Tuesday as part of a bill to continue operations of the Public Utility Commission of Texas.
Sen. Troy Fraser, R-Horseshoe, offered — and ultimately withdrew — an amendment requiring a cost-benefit analysis before the utility commission could make a fundamental change in how electricity is bought and sold on the wholesale market.
The issue is whether consumers would continue to pay only for the energy they use or also would pay extra — so-called capacity payments — for investors to build new power plants.
Fraser said he was trying to send a message to Wall Street and the utility commission that the Legislature supports the existing wholesale market and opposes changes that would enrich generators at the expense of power customers, particularly manufacturers.
“The capacity market isn’t going to put more steel in the ground,” Fraser said. “It’s just going to put more money in the pockets of existing generators.”
Sen. John Carona, R-Dallas, objected to a “major public policy change” being considered as an amendment, instead of as a bill that is considered in committee with public testimony.
Carona said he supports the current energy-only market as Fraser does, but he argued against the amendment requiring a cost-benefit analysis if any market change might cost consumers $1 billion or more.
“It puts the interest of manufacturers over other consumers,” Carona said. “It ties the hands of the PUC.”
The utility commission voted 2-1 last year to continue the energy-only market, despite the diminishing power reserves, because the two commissioners argued that higher wholesale prices ultimately would spur investors to build new power plants.
But one of the two commissioners in the majority has resigned and must be replaced by Gov. Rick Perry. That could change the voting dynamic on the three-member commission.
ERCOT has plenty of generation capacity except during about 100 hours of peak demand on summer afternoons when air conditioning accounts for half of the demand. But a drought and extreme temperatures in 2011 tested the limits of the state’s largest grid, which serves three-fourths of the state, including Central Texas.
ERCOT narrowly avoided rolling blackouts that summer.
Since then, the utility commission has voted to triple the cap on wholesale prices over several years, trying to encourage investors to build new power plants. ERCOT also has made operational changes to lessen the threat of rolling blackouts, although the weather and maintenance issues at power plants can affect the grid manager’s margin of error.
Although Fraser withdrew his amendment, he said the same language is in the House version of legislation continuing operations at the utility commission. He said he expects it will be resolved in discussions between the two chambers.
“I’m trying to send a clear message that the Legislature wants to be involved,” Fraser said of any change in the wholesale market.