PUC Officially Files To Raise Market Cap

Posted on Posted in PUC/ERCOT, Texas Electricity, Texas Electricity News

The staff of the PUC has officially filed a proposal to raise the market cap to $4500, up from the current cap of $3,000. This has looked like a foregone conclusion for months now, considering Donna Nelson was pushing hard for this well before the recommendation ever came back from the Brattle Group, a professional firm the PUC hired to assess the resource capacity of the Texas marketplace and the options to assure resource adequacy.

Ironically, the Brattle Group report state that increasing the Market Cap to $4500 in no way assures any new capacity and thus doesn’t do much other than guarantee higher electricity rates for Texans. Of course, if you read further about the study in the link from Paul Ring at Energy Choice Matters, there are plenty of reasons to doubt the interviews the Brattle Group used to draw their conclusions. But that doesn’t change the fact that the purpose of this move is specifically to draw new investment, and even the paid consultants believe that this move doesn’t guarantee any new construction in generation.

And once you come to the conclusion that raising the market cap guarantees nothing other than increased electricity prices for Texans and provide political cover for Donna Nelson, everything else said about the subject by the PUC is just spin and misdirection. This much is very evident in the following quote from the filling proposal:

“While the commission cannot guarantee the construction of new generation, a $4,500 SWOC will make ERCOT a more attractive market to maintain existing generation facilities and encourage future generation investment,” Staff’s preamble states.

So even the PUC admits this move offers no guarantee. And the Brattle Group actually suggests that the price, in this current system, might need to go as high as $9000. And there’s absolutely no reason that any price changes need to be implemented this summer without taking time to think through a better long term solution, while we still have time and generation reserves. Unfortunately, it doesn’t look like that is in the cards, and the biggest loser here is consumers and the Texas electricity market.

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