The PUC is not taking a direct approach to the current challenge of generation capacity. Renewable energy subsidies have brought increases in wind generation that reduce the price but not the economic cost of the state’s energy. The reductions have, in turn, lowered incentives to build dispatchable generation, the absence of which will degrade reliability as intermittent power looms larger in the resource mix. Instead of directly addressing renewable energy subsidies, the PUC has chosen to increase electricity prices across the board to fund subsidies for all generators. The potential increase in power costs for Texas consumers could be $1.3 billion this year and could grow to $2.5 billion by 2020.
- Renewable energy subsidies have brought increases in wind generation which has lowered incentives to build the dispatchable generation that is needed to maintain reliability of the Texas electricity grid.
- Instead of directly addressing renewable energy subsidies, the PUC has chosen to broaden the use of its Operating Reserve Demand Curve (ORDC) that could lead to a $1.3 billion increase in power costs for Texas consumers that could grow to $2.5 billion by 2020.
- A more efficient and economical resolution than the ORDC is to eliminate subsidies for intermittent renewable energy.
- If eliminating subsidies proves politically impossible, the PUC’s best option will be to reduce the scope of the ORDC by directly changing ERCOT’s rules to require that wind and solar operators rather than consumers bear the costs of their intermittency.