SENATE’S BILL INCLUDES SMART MOVES ON GRID
Finally, a bill is moving through the Texas Legislature that would bring some muchneeded reforms to the Texas electricity grid.
State Sen. Charles Schwertner’s Senate Bill 3 would strengthen existing state regulators, limit how long electricity prices could spike and order generators to prepare for inclement weather or face potential penalties.
“We cannot leave this session without market reform,” Schwertner, R-georgetown, said in introducing the bill’s latest iteration.
After reading the half-hearted bills moving through the House, Schwertner’s bill is a sincere effort to ensure the Texas Blackout that killed more than 100 people and left millions without power or water never happens again.
Guaranteeing a reliable grid should be the priority. But Schwertner is already facing pushback from industry lobbyists. Unless the public remains vigilant, Schwertner’s effort could end up just as watereddown as the House bills.
Here are the highlights of the version approved by the Senate on Monday:
• Establishes an emergency communication system to keep everyone informed about the status of the grid during inclement weather.
• Gives the Public Utility Commission and the Texas Railroad Commission authority to require facilities to implement appropriate recommendations identified in third-party assessments triggered by a weatherization failure.
• Directs the PUC and RRC to create penalty matrixes “for companies who refuse to act in good faith, ranging from a letter of reprimand to an instruction to a million dollars in fines per violation per day,” Schwertner promised.
• Requires the PUC and RRC to review and accept annual
emergency operation plans from all parties along the energy supply chain.
• Redefines the existing Texas Energy Reliability Council and directs it to map the energy supply chain and identify what measures are needed to guarantee reliability.
• Abolishes electricity plans that expose consumers to the wholesale market, where prices can jump 30,000 percent.
• Requires the Electric Reliability Council of Texas to contract for back-up power that can make up for intermittent generation, such as wind and solar.
• Strengthens reporting related to on-site generation to ensure ERCOT has a complete picture.
• Requires entities that furnish water services to provide emergency preparedness plans to be approved by the Texas Commission on Environmental Quality.
• Directs the PUC to limit the period that the wholesale price can stay at its maximum of $9,000 a megawatt-hour to 12 hours. It also limits the price of back-up generation to 150 percent of the wholesale price.
That last measure, limiting scarcity pricing to only 12 hours, was quickly slammed by a lobbyist for the electricity generators.
“Scarcity pricing is an important component of our energyonly market; limiting the duration of scarcity pricing to 12 hours would prevent the energyonly market from providing the incentives to increase supply and, quite frankly, maintain the existing supply that we have,” said Michele Richmond, speaking on behalf of Texas Competitive Power Advocates.
The look of incredulity on Schwertner’s face during her testimony was priceless. For those who did not catch her implicit threat, she was saying that electricity generators would shut down more Texas plants and create even bigger problems if the Legislature passed the measure.
“Putting a cap on the scarcity pricing time in statute may send the wrong signal and have the opposite outcome of what you are looking for,” Richmond added.
Schwertner pointed out that before the Texas Blackout, the longest prices had ever remained at their $9,000 limit was 4 hours. Maximizing prices for four straight days did not make a difference in getting more generation online during the crisis. All it did was create huge financial problems for those who kept the lights on.
Richmond, though, would not be swayed. If the bill passes with the maximum price and duration in statute, the corporate members of her group might close their power plants and leave Texas in a lurch. She said her members preferred that pricing issues go before the PUC.
Corporations in the past have had great success convincing the three-member PUC to tilt in their favor, especially since the public pays little attention to it, and there are not enough journalists to cover it. And a side note: Gov. Greg Abbott has yet to announce any new members even though all three commissioners have resigned.
Richmond’s criticisms were the only real opposition to the bill expressed during the committee meeting. The Sierra Club, the Texas Oil and Gas Association and others said they were generally supportive, though there are concerns about fees on wind and solar facilities. The Senate passed the bill 31-0.
While SB 3 is not perfect, and will not solve all of the grid’s problems, it would be a good start. Texans should keep a close eye on it, though, as lobbyists are undoubtedly swarming lawmaker offices pushing for more changes before it reaches the governor’s desk.