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Texas plant gets nod to export to Mexico

Blackstone's Frontera plant in Mission will sell electricity to industrial users

The opening of the electricity market in Mexico is supposed to mean lower energy costs for consumers in the long term. But for at least one power generation plant in the United States, the benefits will be seen this year.

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The U.S. Energy Department gave approval yesterday for the export of electricity from the Frontera gas-fired plant in Mission, Texas, one of three owned by the private equity firm Blackstone Group LP. It bought the plant in 2013 just as the legislation was being passed in Mexico to end the state’s monopoly on energy.

Selling the electricity to industrial consumers in Mexico rather than those in Texas represents a considerable advantage to Blackstone given the price differential. Customers north of the border pay less than US $0.06 a kilowatt hour. In Mexico the price is about $0.11.

There has been some movement of electricity across the border but usually to handle emergency situations. Now there are some concerns that the export permit granted to Blackstone might not be good for consumers in Texas, which has a history of shortages.

Energy economist Ed Hirs at the University of Houston says it is “potentially very bad” for those consumers because of the possibility of shortages. Demand for electricity grew 17% from 2003 to 2013, putting enough strain on resources that rolling blackouts have been implemented as recently as last October.

However, Blackstone will be required to make electricity available to the state in case of emergencies, though only for a limited time.

It will sell 170 megawatts this year and all of the 524-megawatt plant’s output in 2016.

Energy trader Vitol Group and Sempra Energy are also seeking permission to export electricity to Mexico.

Source: Washington Post (en)

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