PUCT's Anderson Remains Skeptical of Capacity Markets

PUCT Commissioner Kenneth Anderson express continued skepticism of capacity markets during a conference call with UBS Investment Research this afternoon.

The call, hosted by Julien Dumoulin-Smith, Director of US Electric Utilities & IPPs Group for UBS Investment Research, is the third in a new series of calls with retail market thought-leaders for UBS clients concerning the competitive electric markets.

Much of Anderson's discussion regarded his recent memo on various measures the Commission should undertake to strengthen price signals and assure resource adequacy in ERCOT's energy-only market. (see 11/11)

In discussing resource adequacy, Anderson also reiterated that he has yet to see a capacity market accomplish what they are designed to accomplish.

While this comment is consistent with Anderson's prior comments and nothing new, Anderson had made comments at the October 27 open meeting noting the dramatic changes in the nature of project finance over the last three to four years, citing in particular that the amount of equity required for projects is now significantly greater

These comments had been seized on and interpreted by capacity market supporters as potentially indicating a new receptiveness to capacity markets at the Commission.

However, given Anderson's comment on capacity markets today, that does not appear to be the case.