Wholesale electricity price cap hike not necessary, report says
Houston Business Journal by Olivia Pulsinelli, Web producer
While Texas’ wholesale electricity price cap hike goes into effect Wednesday, an independent report created for the Texas Public Utility Commission says it wasn’t necessary to spur new power plant construction.
Potomac Economics, a consulting firm with offices in Austin; Fairfax, Va.; and Carmel, Ind., wrote the report and found wholesale electricity prices were already high enough to support power plant construction, the…
The question is what does a market have to offer to entice companies to enter the market? In Texas the PUC thinks it is limitless wholesale prices. In my opinion the way to get more market players is to offer a return on investment sufficiently at or above opportunities elsewhere. Very high wholesale price cap hikes appear to tilt the generation companies to the last MW instead of the first. This sends a signal for companies to play the waiting game before announcing new generation plants. Environmental regulators do not help the situation either with frequent announcements of new requirements.