Regulators approve power market change expected to raise costs
Texas regulators approved a proposal to change the way wholesale electricity markets work in Texas, a move expected to significantly boost revenues for power generators while increasing electricity prices for consumers and businesses.
The state’s power companies have long pressed regulators for relief from a competitive market that in recent years has paid low prices and hurt their profits. The companies have argued that without changes that increase prices, they won’t have incentives to invest in new power plants as electricity demand grows and potential shortages loom.
The state’s power companies have long pressed regulators for relief from a competitive market that in recent years has paid low prices and hurt their profits. The companies have argued that without changes that increase prices, they won’t have incentives to invest in new power plants as electricity demand grows and potential shortages loom.
The Public Utility Commission of Texas on Thursday approved a change to a market mechanism known as the operating reserve demand curve, which pays higher prices to power companies by increasing the wholesale price of electricity when demand increases and reserves run low. The commission estimated that the change would increase wholesale power costs by nearly $80 million over two years, assuming that new power plants come online to boost supplies, old plants stay online for longer than they would have otherwise and people react to higher prices by cutting their consumption.
