Texas House passes bills to bolster grid

The Texas House of Representatives on Tuesday passed a pair of bills aimed at shoring up the state’s supply of natural gas-generated electricity for use in emergency weather events.

Senate Bill 2627 creates a taxpayer-funded low-interest loan program for companies that pledge to build or upgrade natural gas or coal plants. Senate Bill 7 puts a cap on how much the state can spend on an electricity market redesign plan that would pay certain power plants a credit for being available during times of peak demand. The credits are meant to incentivize the building of more natural gas-generated electricity.

The bills will now go back to the state Senate, which can accept the changes made in the House or send it to a committee for reconciliation.

Large electricity users in the state, such as industrial facilities and oil and gas companies, as well as big power generators such as Houston-based NRG Energy, appeared lukewarm in their support for SB2627. The fund will likely need to go before voters for approval in November.

In committee hearings, electricity generators told lawmakers they don’t need access to capital to build more natural gas power plants – they need guaranteed revenue.

SB7 amends the Public Utility Commission’s market redesign plan, called the Performance Credit Mechanism. The bill puts a cap on the program of $1 billion.

Companies that supply the Texas grid with electricity are only paid for the power they supply, not for being available. The PCM plan would pay socalled dispatchable generation – power plants that can fire up with the flip of a switch, such as those fueled by natural gas or coal – a credit for being available. Companies that sell electricity to residential and commercial customers would pay for those credits, likely passing on the cost to consumers.

The bulk of power generators in the state, including NRG, Calpine and Vistra, support the Performance Credit Mechanism plan as it was approved by the Public Utility Commission in January and are opposed to the alterations in SB7. In committee hearings, trade groups representing power generators argued the cap would render the program ineffective, saying a much higher limit was needed.

The state’s largest electricity users support SB7, with trade groups for large manufacturers and industrial facilities telling lawmakers without a cap the program would hurt their bottom lines. Environmental groups and consumer advocates also support SB7.