Power reserve margin should not be altered, senator says

Texas Senator Troy Fraser, chair of the Senate Committee on Natural Resources, is urging Texas grid planners not to revise electricity needs estimates, saying that the unseasonably hot summer of 2011 will skew results to favor large utilities.

The Electric Reliability Board of Texas plans to meet Tuesday to discuss whether to increase the reserve margin from current rates of 13.75 percent to 16.1 percent, based on recommendations from its Technical Advisory Committee.

In a July 15 letter to the Board, Fraser (R-Horseshoe Bay) urged it to exclude extreme years from its calculations in determining whether the target reserve margin, which estimates the needed capacity in the system under peak conditions, is sufficient.

“It allows a disproportionately hot year to weight the 15 year average, thereby increasing the demand probability and requiring a higher reserve margin,” the Republican state senator wrote. “Both electric end users and I have expressed a desire to exclude extreme years when computing future reserve margins. Any extreme weather fluctuation should be discounted as it represents an anomaly in weather patterns.”

In his letter, Fraser cautioned that expanding the estimated needed reserve margin would benefit generation providers by moving the state closer to a capacity market, a system that pays generators to keep a guaranteed amount of capacity available, whether or not it is used.

Texas currently operates in an energy-only market, in which generators are paid only for power that consumers actually use.

“An increase in the target reserve margin of this scale could not help but serve the interests of those advocating for a capacity market, a system which would subsidize existing generation,” Fraser wrote.

The two Texas Public Utilities Commissioners have indicated that they are still considering options to ensure Texas’ electricity reliability. Commissioner Ken Anderson has said he is not convinced that a capacity market would help provide the needed generation on extreme days.

“A capacity reserve margin is not in and of itself  a guarantee that you never have rolling blackouts,” Anderson said in a June interview with the Chronicle, noting that the system had a 16 percent capacity margin when an unseasonably cold snap knocked some power plants offline on Feb. 2, 2011. There were nine emergency alerts in 2011, most triggered by record summer temperatures.

Anderson said that part of the problem is that a capacity market would not necessarily encourage new construction, especially for the peaker plants that are needed in emergency times.

“We don’t need a lot of base load generation,” Anderson said. “Our minimum load has been flat. We are talking about peak times and what we have is a problem that is maybe 120 hours. In 2011, the worst year we ever had, it was 80 hours, and the big, big problem is much less than that. With that kind of a problem, moving to a centralized forward capacity market will not guarantee reliability.”

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