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Lawmaker says Texas agency moving too fast to reform power market

HOUSTON, Nov 25 (Reuters) - A powerful Texas legislator told state regulators they are moving too quickly to reform the $29 billion wholesale power market and should not make major steps without input from lawmakers, at a hearing on Monday.

Texas Sen. Troy Fraser, chairman of the Texas Senate Committee on Natural Resources, urged the three-member Texas Public Utility Commission (PUC) to "slow down."

Fraser called the hearing after the PUC late last month took an initial step which observers believe will lead to creation of a so-called "capacity market" to bolster state electric resources at an annual cost of $4 billion or more, Fraser said.

After months of discussion and delay, two of three PUC commissioners said they support a mandatory reserve margin as a cushion against blackouts, rather than the current "target" reserve of 13.75 percent.

"I am asking the PUC to slow down," Fraser said at the end of a three-hour hearing Monday. "You are making votes you should not be doing. The Legislature needs to weigh in."

Capacity markets are used in other U.S. power markets and many power generators say Texas needs such a construct to raise wholesale prices to the level needed to allow construction of new power plants.

The state's power industrial sector, including petrochemical companies, oppose capacity markets. Representatives from Valero

Power plant owners in the state include Luminant, a unit of Energy Future Holdings, which is owned by Kohlberg Kravis Roberts & Co LLP and other private equity firms; NRG Energy, Calpine, NextEra Energy Inc and Exelon Corp.