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Public Utility Commish Says We Don't Need To Make It Rain Cash To Keep the Lights On

Public Utility Commish Says We Don't Need To Make It Rain Cash To Keep the Lights On

Regulators are absolutely desperate to keep us away from that white-knuckle precipice of rolling blackouts we so perilously toed last summer. And they're willing to try anything to entice electric generators to build more power plants and bring existing plants out of mothballs in the meantime.

The main idea is to pay them more by raising the price ceiling on electricity, which is currently $3,000 per megawatt-hour. Thursday, the Public Utility Commission of Texas, electricity's regulatory body, tentatively approved two rules that would do just that. The first would triple the price ceiling by 2015. But the second rule could take effect as early as August 1, raising the ceiling to $4,500. Commissioner Kenneth Anderson doesn't think that's such a good idea. So Unfair Park caught up with him to ask why he thinks raising the wholesale price of electricity this summer isn't necessary, and why it might even have some unintended consequences for the rest of us.

For starters, barring an even more hellacious summer than last year's, we should be OK. Enough generators are bringing units back into service to provide the amount of power we need to make sure we can cover peak demand times this summer.

"(The other commissioners) are taking a conservative approach in terms of reliability," Anderson says. "My personal perspective is with weather predictions -- and I understand my colleagues' view on this, because anybody who bets money on Texas weather is bound to lose -- my view is that ERCOT already received formal notices for a significant amount of generation coming out of mothball. That puts the reserve margin over 14 percent." (ERCOT -- the Electric Reliability Council of Texas -- oversees the state's electric grid.)

At Thursday's hearing, Anderson said raising the price this summer would accomplish at least one thing for sure: Given the spread between cheap natural gas and jacked-up wholesale prices, gas-fired generators will need "Mack trucks" to haul all the cash they're going to rake in when air conditioners test the Texas grid.

But there's another side-effect in the commission's prescription for blackout prevention. Normally, you sign a contract with a retail electricity provider to sell you power at a fixed rate. Commission rule changes like this one, however, might allow them to raise electricity rates to reflect the new price ceiling. Anderson believes many providers will just eat the difference, but some of them are sure to pass it along to the customer.

"My colleagues' view is that we need to make sure we have every unit out of mothball that can come out as the more important consideration," Anderson said. "I lived through (the February 2011 rolling blackout) and last summer, and there were days when I wore my fingernails down. I believe we're in a better spot than we were last summer, and we've got units coming out as of yesterday's open meeting. We've got 1,300 megawatts of generation coming out this summer.

"I believe more will."


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