The most efficient way for the state’s largest electricity grid to combat predicted power shortages in coming years is through a system, used in other deregulated markets, that encourages generators to build new supply by bidding for power several years in the future, a consultant hired to examine the issue reported today. Other options include allowing higher prices during peak demand periods, arranging additional back-up power sources and encouraging ways to reduce demand during peak periods. The Brattle Group study was performed for the Electric Reliability Council of Texas, which serves about 75 percent of the state, and the Public Utility Commission of Texas.

Brattle’s recommendation to use what is called a “forward capacity market” would inject a new role for regulators and is somewhat at odds with the state’s so-called “energy only” deregulated market. Currently, price alone drives generators’ decisions whether to build additional supply or not for the ERCOT market. Brattle said the forward capacity market has been used in the Northeast, and Texas could learn from those experiences if it adopts this model.

Keep reading at the Fort Worth Star-Telegram.