Texas considers raising allowable power prices to spur capacity additions

One of Texas' primary power distribution regulators could soon open up the state's market to higher electricity prices, according to The Austin American-Statesman.

Texas has seen rapid growth in electricity demand across the state, leading to congestion in its power infrastructure and concerns about potential blackouts. Last summer, when Texas suffered its worst drought in more than 100 years, the state barely escaped a devastating series of blackouts.

In response, the Texas Public Utilities Commission has mentioned the possibility of raising the cap on peak electricity prices, currently set at $3,000 per megawatt-hour. Prices could reach anywhere from $4,000 as soon as next year to $9,000 five years down the line.

"I want to send the market a strong signal so we can get the investment we need," PUC Chair Conna Nelson told the American-Statesman.

There are some concerns that any change in policy could lead to a spike in residents' electricity rates, so the commission has so far moved carefully.

But the Electric Reliability Council of Texas reported at the end of last year that reserve margin in the state has fallen around 5 percent, and could drop as low as 3.6 percent by 2015 under current conditions.

Analyses of the transmission and distribution industry can be found at PennEnergy's Research area.

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