The Good, The Bad, and the Pricey of Texas Energy Bills

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Shoring up grid reliability continues to be a hard lift at the Lege, despite the debacle of the 2021 winter storm and subsequent wobbles.

Bills that further subsidize natural gas and discourage renewables – and threaten to pass on the necessary cost of reliable power to the consumer – advanced further in the Lege yesterday, while energy efficiency measures stalled ahead of Saturday’s deadline to pass all bills out of committee.

Wednesday night, the Senate heard testimony on Sen. Sarah Eckhardt’s Senate Bill 258 – left pending in committee – which would establish an energy savings goal of 1% annually by 2030 for every electric utility. This would increase state energy efficiency goals for the first time since 2011, according to Sierra Club Lone Star Chapter. The Public Utility Commission would establish rules for utilities to offer rebates and incentives for strategies like weatherization to customers, in order to meet the goal in a 7-year implementation period, which could potentially save consumers money. Now, the bill is dying, thanks to utilities like Oncor and CenterPoint lobbying against it. Sierra Club’s Cyrus Reed tweeted Friday morning: “I find it ironic or maybe not that all [session] the utilities have pushed solutions that will cost consumers more but the one solution that could help consumers save money they are opposing. [M]ore worried about their performance bonus than their customers.” SB 258 already makes “significant compromises,” according to Sierra Club, including possible exemptions. “It is a modest, common-sense, long overdue piece of the larger grid puzzle in Texas,” said Reed.

Meanwhile, SB 7, which includes the Public Utility Commission’s idea of the Performance Credit Mechanism, passed out of committee yesterday. The PCM would give power companies credits if, when the grid is stressed by extreme heat or cold, they can commit to provide power within two hours of being called on, and keep running for at least four hours. Power companies that meet those requirements could then sell credits to municipal utilities and co-ops like Austin Energy or Pedernales Electric Cooperative, which would allow them to be more financially stable amid fluctuations in energy demand – but the cost of the credits would be passed to the consumer and could average a 2% increase in your monthly electric bill, according to the PUC. To make sure consumers don’t bear too much of the burden, SB 7 includes a cap of $1 billion for credits – but that cap is controversial.

Major power generators don’t like the cap – they say without the financial incentive of being able to sell lots of credits, they won’t be able to get investors to build new power plants. But major consumers who would pay for the credits – like the Texas Oil & Gas Association – say “without a meaningful cost cap, generators are given a blank check, and consumers will have imposed on them a giant electricity tax.” Samsung, Valero, Freeport LNG, and other huge consumers sent a letter to House Speaker Dade Phelan Tuesday estimating the PCM could cost as much as $10 billion a year and needs a “hard dollar cost cap” to avoid “major cost increases for consumers.” (It’s important to note that these consumers already sell power back to the Electric Reliability Council of Texas (ERCOT) during times of high demand and are thus profiting off the current system.)

Rep. Chris Turner, D-Grand Prairie, says a hard cap would jeopardize reliability. ERCOT data requested by Turner’s office shows that the current $1 billion cap would result in more than one “loss-of-load” event (meaning a blackout) every year – most standards around the country average one every 10 years. Turner told the Chronicle a more flexible cap, that could respond to fluctuations in the market and the weather, would both increase reliability and avoid sending exorbitant costs to the consumer. He says if the PCM starts to become more expensive than the PUC and ERCOT expect, the Lege can come back to it in 2025 or 2027.

Meanwhile, Sen. Charles Schwertner’s SB 2627 – a reprise of SB 6, which would create a $10 billion low-interest loan program for gas plants to be built by 2029 – billed as a plan to create a sort of statewide fleet of backup generators to be deployed in energy emergencies – also passed out of the House State Affairs committee yesterday without a hearing, in the state Agricultural Museum, and without a recording, KUT’s Mose Buchele reports. The bill uses a lot of taxpayer money to subsidize new natural gas buildout, which some say will shore up the reliability of the grid – detractors say they can get loans from the private market, and at least $10 billion of taxpayer money should have a public hearing before it’s passed.

The cap on the PCM and Eckhardt’s energy savings bill still hang in the balance. Sierra Club’s Dave Cortez said in a statement yesterday: “Utilities like Oncor, TNMP, AEP, and CenterPoint – all who’ve recorded massive profits since Winter Storm Uri in 2021 – have a chance to be real heroes to Texas families struggling to pay rising electricity bills and to help make the ERCOT grid more reliable. Instead, they are choosing to prioritize those profits and threatening to raise costs on ratepayers.”

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