News Room - TCPA In the News
Power plan could clear D-FW air, lower bills
Marianne Carroll
Dallas Business Journal
April 11, 2005
As Dallas-Fort Worth residents are becoming more interested in what is in the air they breathe and how it could impact their health, state and federal regulators and environmental groups are looking at methods -- some of them punitive -- to improve local air quality.
What if -- in addition to reducing air pollution-- you also could lower the cost of providing power, contribute to long-term economic growth and ensure that enough electric power is available to meet all the area's demands at any given time?
This all could be possible under a proposal to change the way electricity is generated, delivered and priced on the wholesale level within the portion of Texas served by the Electric Reliability Council of Texas.
The proposal -- adoption of a "nodal" wholesale electricity market design -- is under consideration by the state Public Utility Commission and targeted for implementation in October 2006.
A nodal market design could reduce the overall cost to serve Dallas-Fort Worth residents by $148 million in its first year of implementation, and by $1.6 billion over a 10-year period, according to an independent cost-benefit study filed with the PUC. Statewide, cost savings would reach more than $8 billion over 10 years.
Using more efficient plants to generate electricity under a nodal market could save $1.2 billion statewide in annual electricity production costs, according to the independent study. About one-third of that savings would be in the region that includes Dallas-Fort Worth.
Just as important as cost savings for Dallas-Fort Worth residents, the nodal market design also could reduce pollution and enhance the reliability of the power grid.
Electric power transmission and generation capabilities in the Metroplex are not keeping up with the area's population growth. As a result, the region frequently experiences congestion, or bottlenecks, along electric power lines. Annual transmission congestion costs paid by Texas electricity consumers in ERCOT reached as high as $400 million in 2003.
The current "zonal" market design allows generation owners to plan the dispatch of their plants without regard for transmission congestion. ERCOT, which oversees the state's power grid, has to step in several times a day to make last-minute calls on certain power plants to generate more or less electricity to relieve congestion on transmission lines and keep power flowing to homes, schools, hospitals and businesses.
The decentralized dispatch by generation owners in the current market often requires ERCOT to tap expensive, inefficient, polluting plants to meet reliability needs, even when those decisions don't make the best economic or environmental sense.
Incentive to build
Under a nodal market design, ERCOT would be able to
centrally plan the dispatch of generation ahead of time
based on price and efficiency, leading to the growing use
of newer, more efficient plants. In addition, a nodal market
provides market price signals that will give companies
incentive to build more of these plants, even in the Dallas-Fort
Worth area.
How much better is one of these newer plants for the environment? These cleaner combined-cycle gas turbines can produce the same amount of electricity using 30% less fuel and with 65% less air emissions, according to University of Texas engineering professor Dr. Ross Baldick.
A nodal market would reduce nitrogen oxide emissions statewide by 32,700 tons over 10 years as some output of steam turbine gas-fired generators is replaced with the output of more efficient combined cycle plants, according to the independent study filed with the PUC.
A nodal market design is not only a win-win for consumers and their health, but also for the area's long-term economic development. In the competition to attract new business, surely being able to boast of lower electric costs, a reliable power supply and healthier air would give the region an advantage.
In the long term, transition to a nodal market will pay
big dividends for all of ERCOT, with the Dallas-Fort Worth
area enjoying a healthy share of the benefits.
Carroll, an Austin attorney, is executive director of Texas Competitive Power Advocates, a trade association of power companies.
© 2005 American City Business Journals Inc.