The Texas Public Service Commission is changing the energy market
Friday, December 17, 2021
The outages caused by the winter storm Uri in February 2021 raised great concerns about the reliability of the Texas power grid. Currently, the state has only an energy market, where the price of electricity is determined on the basis of supply and demand.
- Generators are paid less when enough power is available and very high when electricity is scarce.
- However, PUCT President Peter Lake speaks of it as a “crisis-based business model” that motivates generators to sell electricity when supply is already strained and the grid is about to collapse.
On Thursday, December 16, PUCT approved several changes in the Texas energy market. The market will now reward power plants for their availability and reliability, and this includes payments for on-site fuel generators and those who can respond quickly to changes in grid frequency. In addition to these measures, PUCT will also introduce incentives for large consumers, who can reduce their demand when the grid is congested.
Responses to these changes have been mixed. An energy market structure that rewards reliability can ensure a more stable energy supply, which is an improvement over the current pricing model based on scarcity. However, energy experts and consumer groups fear that recent market changes could increase electricity prices.