A Houston lawmaker has proposed that consumer costs and benefits be part of the formula in deciding how to encourage power generators to build new plants at a time when demand is testing the state’s electricity capacity.
State Rep. Sylvester Turner filed a measure on Tuesday that would require the Public Utility Commission, which oversees the state’s electric power market, to conduct a cost-benefit analysis if a proposal would add more than $100 million to annual consumer electricity costs.
Such analysis would include projecting how a proposal would affect wholesale and retail prices.
“Millions of people will be impacted one way or another, and this would serve as a check and balance to the actions the PUC is considering,” said Turner, a Democrat, in an interview.
His amendment is one of 34 the state House will take up Wednesday as it considers legislation re-authorizing the Public Utility Commission for another 10 years.
The legislation is part of the agency’s periodic Sunset Advisory Commission review, which assesses what functions agencies perform, whether they’re still needed at all and whether their duties should change.
Other proposed amendments cover limitations on rate changes, increased targets for renewable energy production and rates on access to transmission services outside of Texas.
One of the most pressing issues facing the utility regulator – although it is not addressed in the original Sunset bill itself – is how to encourage generators to build additional electricity capacity.
Most of Texas moved to a competitive market for retail and wholesale electricity in 2002.
Government and industry have found it challenging to ensure sufficient capacity in the system at times of peak demand.
The Public Utility Commission recently raised the cap on wholesale prices to $4,500 per megawatt-hour at peak times as an incentive for generators to add capacity, and the agency plans to increase the cap to $9,000 by 2015.
The commission has said in the past that it also is considering trying another approach, called a capacity market, in which the state would pay generators to build and maintain reserve capacity rather than relying solely on market-based incentives like the higher wholesale cap.
That idea has led to concerns about additional costs to electric customers.
The major change for the Public Utility Commission that is included in the Sunset legislation would move authority for water regulation to the PUC from the Texas Commission on Environmental Quality.
The legislation also authorizes adjustments to the financing and budget process for the Electric Reliability Council of Texas, which operates the electric grid and manages the deregulated market for most of the state.
The measure is HB 1600.