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Approved: PUCT revision will likely increase electric prices in Texas

January 17, 2019

 

 

Jan. 17, 2019 - The Public Utility Commission of Texas (PUCT) approved the proposed changes to the ORDC at its scheduled meeting today. Changes will be implemented using a phased-process. ERCOT will implement a .25 standard deviation shift in the ORDC by April 2019 with a second shift of .25 in the spring of 2020.

 

In a memo to ERCOT Commissioners Shelly Botkin and Arthur D'Andrea, PUCT Chairman DeAnn Walker explained why action is necessary and the expected impact on electric prices in Texas.

 

"I truly believe that the Commission must take some action to address the sinking reserve margins in ERCOT. While those actions will likely increase prices in ERCOT, I also do not believe that inaction on the Commission's part will keep wholesale prices from increasing. To the contrary, low reserves will likely lead to higher prices as well as increase the threat of power interruptions. As we all are aware, power interruptions come with an economic cost as well. I believe that by the Commission taking measured actions to address the reserve margin concerns, the market can continue to operate in an open and competitive manner."

 

Revision to the ORDC will encourage various market responses, such as the following:

  • Increase demand response development

  • Increase Distributed Generation

  • Produce more self-generation by ERCOT consumers

  • Increased investment in generation maintenance

  • Delay pending generator retirements

  • Faster return to service dates for certain generation units

  • Additional investment in newer generation technologies (quick to build and operationally flexible)

Source: Public Utility Commission of Texas Chairman DeAnn T. Walker


 

Read the PUCT chairman's full memo here.

 

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