Last week, the Public Utilities Commission of Texas (PUC) voted to approve a staged increase of wholesale offer price caps in the Texas electric market for the Electric Reliability Commission of Texas (ERCOT) in order to prop up lackluster investment interest in new power plants. This change fits well with established theories of competitive markets, but it does little to resolve current issues beyond sending a signal to investors that the PUC intends to act further to incentivize investment in new generation.
That same day, the commissioners “swatted aside” a petition to revisit the state’s goal for non-wind renewable energy without allowing any public discussion. Given our need for new drought-proof energy and the fact that solar costs have fallen 80 percent in the last three years, this seems like an issue the PUC would be eager to take up. In fact, when PUC Chairman Donna Nelson was pressed during a state senate hearing this spring to identify state policies that had successfully added electric drought-proof resources, she focused on both the state’s Renewable Portfolio Standard (RPS) and energy efficiency goals.
The PUC has now voted twice to raise wholesale offer price caps for electric generation, even though it voted recently to make it more difficult for the state’s energy efficiency programs to succeed by lowering their price caps. Last week, while voting to increase price caps again, Chairman Nelson noted that the work to ensure new electric generation did not end with that vote. I hope that’s the case because I want to make sure we can keep the lights (and air conditioning!) on too. Since the PUC denied the petition to create a rulemaking to expand the RPS, it seems that their work on expanding electric generation is limited to non-renewable, fossil fuel power plants and not much else. This is unfortunate given the fact that renewable energy is expected to be the world’s second largest source of power by 2015, according to the recently released World Energy Outlook.
Over the last century, Texas has dominated the international energy scene. However, as the playing field changes, we need to make sure that Texas doesn’t fall behind as a state and an international energy leader. Recent PUC decisions may increase that risk, but their final decisions on a new market structure will likely be the ultimate decider.
Texas and its citizens deserve a competitive and diverse energy infrastructure that allows for a wide variety of characteristics in energy resources such as storage, customer-side energy resources, renewable energy, and cleaner-burning modern natural gas-fired power plants. Anything less will risk not only our state’s near term electric grid reliability, but also our long-term economic viability as well.