One Persons Solution to Texas Electrical Grid and Production Problems

Houston Chronicle

In ERCOT’s case, these low electricity prices mean that it is uneconomic to build most new generation capacity, even as legacy generating plants cannot cover their costs even when they are generating electricity.

The advent of less expensive sources of electricity via natural gas and wind-generated electricity — Texas is by far the largest producer of wind energy in the U.S. — further squeezes those legacy generators.

Continued industrial and population growth in Texas are arguments for more electricity generation capacity. Oddly, ERCOT and the Texas Public Utility Commission prefer to instead rely upon very costly transmission lines even when less expensive new generation capacity is available. An example is the decision to approve the fully regulated Houston Import Project transmission line that has absolutely cost consumers more than the less-expensive generation facilities proposed by Calpine and NRG at the time.

Texas should leave its Soviet-style ERCOT market in the dustbin of history. ERCOT must allow all of the generators who are necessary to supply the grid at peak times to earn profits. There are two ways to do this. Both will cost consumers more at the meter but less than buying a generator to power their own homes and businesses when the grid fails, and certainly less than the cost of a power blackout.

The first approach is to install a valid capacity market. Under this approach, generators will be paid to stay idle on the sidelines for most of the year.

The second approach would be to return to a fully regulated market that guarantees a rate of return to all market participants, including generators.