In a decision that could knock gas demand down a notch in Texas, CenterPoint subsidiary Texas Genco Holdings said it will mothball 2,990 MW of older gas-fired generation because of an oversupply situation. The Electric Reliability Council of Texas has forecast a 20% reserve margin this year. Significant new and more efficient merchant power has been built in the state, pushing older plants out of the market.

American Electric Power (AEP) made a similar decision late last year and ended up shutting down nine of its power plants in the state. AEP announced last September that it would mothball up to 16 power plants in ERCOT unless they were needed for reliability purposes. Seven of the plants ended up under reliability must run (RMR) status. The remainder were shut down.

“Lack of bids for most of our intermediate gas products in recent capacity auctions combined with high forecasted reserve margins in ERCOT for the near-term has resulted in this decision,” said David Tees, CEO of Texas Genco. “We will still offer an adequate amount of gas-fired capacity in our upcoming auctions for retail energy providers and other purchasers.”

Three units totaling 777 MW will be seasonally mothballed from October 2003 through April 2004. They include Webster Unit 3 (374 MW), which is currently in mothball status, T.H. Wharton Unit 2 (229 MW) and Deepwater Unit 7 (174 MW). In addition, all four P.H. Robinson units totaling 2,213 MW, will be mothballed from October 2003 through April 2005. This includes Unit 3, which is currently in mothball status, the company said.

“Texas has built a very good market and a lot of independent power producers have come in,” noted Texas Genco spokeswoman Leticia Lowe. “There is a very high reserve margin, and some of these older gas-fired plants are just not competitive anymore. These plants are part of the old integrated [Houston Lighting and Power] utility. They came on line in the 1960s and 1970s. The last of our plants that came online were the nuclear units in the mid-1980s.”

Although Texas Genco believes its decision to mothball the plants will not have an effect on the adequacy of electricity in Texas, it will apply to the grid operator for RMR consideration for each of the mothballed units.

ERCOT, one of 10 regional electric reliability councils in the U.S., is the corporation that administers Texas’ electric load and oversees operation of 70,000 MW of generation and more than 37,000 miles of transmission lines.

Texas Genco has more than 14,000 MW of generation capacity. The company owns and operates 60 generating units at 11 electric power-generating facilities and owns a 30.8% interest in a nuclear generating plant.

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