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03/07/2013

PUC Chair: no decision on energy market likely until fall

Donna Nelson, chair of the Public Utility Commission of Texas, said Thursday that it likely will be fall before the agency decides how to respond to whether the state should adopt some form of payment to generators to assure an adequate supply of electricity at peak demand periods. Nelson, speaking at the IHS CeraWeek energy conference in Houston, said the agency really needs to be at full strength before making a ruling. Commissioner Rolando Pablos resigned March 1, and the two remaining members, Nelson and Kenneth Anderson, are on opposite sides of the issue. Nelson has favored some version of so-called "capacity" payments to balance supply and demand, while Anderson opposes capacity payments.

"We have studied it a lot," Nelson acknowledged. "We've made thoughtful progress," she said, but "we need a third commissioner to decide." Texas since it deregulated much of its electricity market more than a decade ago has employed an "energy only" market, in which generators only earn revenue when they sell power. Capacity markets have tools for generators to receive payments in compensation for operating enough capacity to meet anticipated peak demand. Low wholesale power prices have not given generators adequate incentive to add new capacity, but capacity markets generally add costs that must be passed on to energy consumers. 

-- Jim Fuquay

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