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PUCT Commissioners Express Skepticism of Capacity Market
June 23, 2011
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Texas, "must not in a reactionary mode rush to impose up-front administrative fixes to potential future threats, and thereby do exactly that [about] which we are fighting the EPA: and that is increasing the cost of doing business ... through [higher] electric charges," Luke Bellsnyder, executive director of the Texas Association of Manufacturers, said during a PUCT workshop on potential impacts on resource adequacy from federal environmental regulations.
Bellsnyder said that the PUCT should not react until more clarity regarding the regulations is forthcoming, given expected litigation.
Though not specifically citing a capacity obligation, or administrative triggers for scarcity pricing, Bellsnyder's comments were interpreted by Commissioners as referencing such.
Commissioner Kenneth Anderson noted a recent call for an unbundled capacity obligation made in comments before the PUCT (see 6/20), in which, he noted, proponents called for a capacity mechanism, "without any real proposal of exactly what that is."
Anderson noted that he has consistently asked capacity market proponents for an example of a capacity market that works and that stakeholders are happy with, "which nobody's done."
Commissioner Donna Nelson further noted that there do not seem to be proposals for capacity markets in ERCOT that also don't simultaneously require scarcity pricing to support generation investment.
While acknowledging Bellsnyder's concern, Anderson also said that he is concerned with ensuring that new generation is built, particularly given its long development time, prior to any retirements forced by federal regulations. While Bellsnyder questioned the ultimate effective date of any regulations, Anderson replied that, "hope is not a plan."
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