HOUSTON — Texas manufacturers are asking state regulators not to adopt a proposed modification to the state’s electricity market that would pay generators for keeping additional power capacity available at peak times, saying the change would be costly to consumers and would dampen state growth.
The Texas Association of Manufacturers told the state Senate Natural Resources Committee on Monday that changing to a capacity market would cost Texans billions of dollars without guaranteeing new generation.
“A capacity market would have an unmistakable chilling effect on economic growth in the state with a tremendous, long-term negative impact on Texas energy consumers,” said Tony Bennett, president of the Texas Association of Manufacturers, in a written statement. “The idea that a capacity market is the only way to address power reliability concerns is off-base and is fueled by generators who would benefit from a subsidized market.”
Texas currently uses an energy-only market, in which generators are paid for electricity they actually provide, not for maintaining extra capacity. The Public Utility Commission is considering a move to a capacity market because of concerns about whether there will be sufficient excess generation capacity in the grid in the coming years, as the population continues to growth and the demand for electricity increases.
Grid managers target a margin of 13.75 percent excess reserves to keep the system reliable. While current reserves hover around this level, electricity planners have estimated the margin could drop to 9.4 percent by 2018 and to 4.5 percent by 2023.
But Bennett told the state senators that much smaller adjustments could be made to the Texas market to increase the grid’s reliability — adjustments that would not cost billions of dollars. Proposed adjustment have included improved energy efficiency and permitting generators to provide ancillary power when a margin shortfall is predicted.
In other markets that have adopted capacity payments, more than 90 percent of these payments have gone to existing power plants, Bennett said.