|
5 April 2007 -- The Associated Press reported that TXU Corp. says it could be forced to shut down some power plants if it can't settle charges by state regulators that it manipulated the state's wholesale electric market.
TXU didn't say how many of its older, natural gas-fired plants it might shutter or turn over to other operators. But the AP said the company warned the result would be disruption of the state's wholesale electric market.
Since the utility issued the warning, it has begun negotiating a settlement with regulators, a TXU spokeswoman told the AP on Thursday.
Last week, the Texas Public Utility Commission proposed a $210 million penalty against TXU over charges that during the summer of 2005 it sold power at inflated prices. TXU is contesting the charges.
Regulators also are looking into unusually high prices that generators charged the state power grid earlier this week. The state's independent market monitor said he expected to determine next week whether the increase was due to market manipulation or an early spell of warm weather that raised demand for power.
Mike McCall, chief executive of TXU's power-generation division, wrote to the commission this week to say that the $210 million penalty raises questions about whether the Dallas-based utility can profitably operate older natural gas-fired plants.
TXU claims that it needs to charge prices that cover the short-term cost of fuel plus the expense of maintaining seldom-used plants the rest of the year. In some states, generators are paid just for keeping peak capacity available, but in Texas the power grid pays only for the fuel.
McCall said the Texas system leads to volatile price swings because generators must charge rates that also cover their cost of keeping marginal plants in running order. He said an investigation by consulting firm Potomac Economics Ltd. and adopted by commission staff incorrectly analyzed the way the market works in Texas.
"Unless corrected," McCall wrote, the dispute "has the potential to create a great disruption in the wholesale market."
| 
Articles 
| View all PennWell sites | View all PennWell events
Add RSS Feed
