ERCOT: Texas PUC mulling artificial inflation of power prices to boost grid reliability
Generators in Texas have been plagued by low power prices, which they say creates two problems: They have difficulty turning a profit, and developing new plants is more difficult due to thin margins. Though the PUCT proposal would, as the Chronicle puts it, “artificially inflate wholesale power prices” when demand spikes, the changes would also help incentivize more plants.
In 2014, Texas regulators developed an operating reserve demand curve and raised maximum peak prices to $9,000 MWh. But the new pricing has only been put into play once, leading regulators to weigh how to properly value energy when demand is high.
The problem is compounded in Texas because the state operates as an island, leaving generators no markets for excess power.
Earlier this month, the Electric Reliability Council of Texas released its Seasonal Assessment of Resource Adequacy for spring 2016, noting the grid has more than 79,000 MW of generation resources and an anticipated peak load of 58,000 MW.