Public Utility Commission of Texas Votes to Raise Wholesale Electricity Price Cap

By Shay Ohrel
on June 28, 2012 5:05 pm

The Public Utility Commission (PUC) of Texas voted Thursday to raise the wholesale electricity cap from the current $3,000 per megawatt-hour (mWh) to $4,500. The early heat wave this week pushed peak-hour electric demand to record levels for June and July and wholesale prices briefly hit the current cap of $3,000/mwh. The higher price cap for real-time power, which begins in August, sends a message that the state needs additional generation to meet growing power needs.

PUC Chairman Donna Nelson stated “It is important to send a strong signal at this time.  One thing we can’t do is ignore this and move forward blindly and have faith we will have enough electricity.”

Texas saw a power plant construction boom in the early 2000s, but low cost natural gas and tight financial markets have stalled new investment.  At the same time, stricter environmental rules are expected to force older (and dirtier) coal-fired power plants to shut down.

As demand increases, PUC Commissioners are already considering raising the cap as high as $9,000 per megawatt hour for 2013 and beyond.