Mothballing Old Power Plants In Texas

Here’s a great example of the competitive, market process dynamic at work. According to this article, American Electric Power is planning to retire, or mothball, 16 of its older gas-fired plants in Texas. The article says it well:

The decision to deactivate the plants is a result of the introduction of electricity deregulation and competition in Texas. Many new, highly efficient power plants have been built in Texas as a response to deregulation. These new plants have lowered wholesale power prices to a point below the costs of generating electricity from the 16 older AEP plants.

This is beautiful — competition has brought technological change to bear in electricity in Texas, so these older plants are now obsolete. Maybe Governor Davis should look at the Texas model if he wants to encourage supply (yeah, right, like that’s gonna happen).