Texas considers ways to spur generation, keep rates low

Texas regulators plan to meet to discuss ways to encourage the development of new power generation capacity, according to The Statesman.

Electricity deregulation in Texas has proven successful in many regards, with many customers seeing lower electricity rates than they would have otherwise by switching electricity providers. The biggest problem for the state comes in ensuring that it continues to add power plants fast enough to keep up with demand.

Because electricity deregulation puts electricity providers in more direct competition, they generally see lower profits on each kilowatt-hour of energy sold. This in turn makes some companies reluctant to invest in new capacity because of the risk that they might lose money on these new plants if the current high demand does not continue.

The Dallas Morning News suggests this lack of new generation capacity could lead to higher electricity rates and worse service in time.

“If your plant is out in August, you may have missed the boat to recoup your investment for years,” Karim Barbir with International Power GDF Suez told The Statesman.

To address the issue, Texas’ Public Utility Commission has gathered to discuss options to spur investment in the short term, including options such as raising the allowable price for wholesale electricity, though other options are likely to be considered.