CEO: Texas faces population, economic growth amidst resource adequacy issues

Generation resource adequacy, population growth and the ever-increasing demand for electricity to power new technologies are among the biggest challenges that Texas faces, according to John Fainter, president and CEO of the Association of Electric Companies of Texas.

Speaking at TransmissionHub’s TransForum Texas on April 25, Fainter said that the population in Texas grew to 25 million from 21 million people in the first decade of this century, and is expected to increase to 30 million by 2020. 

At the same time, Texas’s economy has continued to grow, increasing the demands on the electric system both inside and outside of ERCOT, while technologies like cell phones, iPads and high-definition television sets have become fixtures in everyday life.

These innovations and economic and population growth will require large amounts of investment in infrastructure, Fainter said.

“We must consider, as we go forward, looking for investment opportunities to make the infrastructure investment that’s going to be necessary to serve the growing demand we have, not just in Texas, but all over the country,” Fainter said.

Meanwhile, Texas has been facing generation resource adequacy issues, arising from the deregulation of the wholesale market, which has not provided the necessary incentives for the construction of new generation in the state. 

ERCOT, the Public Utilities Commission of Texas (PUCT) and stakeholders have been working to resolve the resource adequacy issue, he said, to “make sure the market signals are reflected and incentivizing new generation.

“There’ve been some steps taken on [increasing reserve margin] caps; they’ve already just in a short time sent price signals on future prices in the right direction,” Fainter said.

The CEO noted that resource adequacy is an issue that should be addressed from such entities as ERCOT, the PUCT and stakeholders.

“We’ve been told by legislators that stakeholders must fix this because ‘you’re not going to like what we do if we have to fix it,’” Fainter said. “The commission and ERCOT are strongly committed to working with stakeholders, and I know we’ll do a better job than the legislature if they get involved.”

Fainter added that despite high electric prices, the legislature has not given serious consideration to returning to a fully regulated market. “To do so would’ve been costly, disruptive and probably counterproductive,” he said.

Likewise, utilities that are operating outside ERCOT continue to be fully regulated monopolies and “undoubtedly will be for the foreseeable future,” Fainter said. “I don’t see any effort … to develop the necessary infrastructure or technology to go into a competitive market,” he added.

About Rosy Lum 525 Articles
Rosy Lum, Analyst for TransmissionHub, has been covering the U.S. energy industry since 2007. She began her career in energy journalism at SNL Financial, for which she established a New York news desk. She covered topics ranging from energy finance and renewable policies and incentives, to master limited partnerships and ETFs. Thereafter, she honed her energy and utility focus at the Financial Times' dealReporter, where she covered and broke oil and gas and utility mergers and acquisitions.