AUSTIN – A bipartisan group of state senators wants Texas’ electric grid regulator to halt its redesign of the state’s electricity market just two weeks after first seeing the proposal.
All nine members of the Senate Business and Commerce Committee sent a letter late Thursday to the Public Utility Commission, telling the power grid regulatory agency that its proposed redesign for the ERCOT electricity market should be placed on hold.
The committee’s chairman, Georgetown Republican Sen. Charles Schwertner, signaled that legislators might take a leading role in the overhaul in next year’s legislative session, which begins Jan. 10.
“Let’s work together this session to get it right for Texans,” he said in a tweet that included the letter.
Energy consultant Doug Lewin said the letter was, in effect, an “indefinite pause” to what has been the chief mission of the Public Utility Commission following the February 2021 winter storm and the blackouts that killed more than 200 Texans.
“The letter signed by all nine members of the Senate Business & Commerce Committee is essentially a vote of no confidence in the PUCT leadership,” Lewin said in an email. “It throws the whole ERCOT market redesign process into even deeper disarray, which was already a mess.”
The Public Utility Commission appeared undeterred by the senators’ letter, a statement from commission spokesman Rich Parsons indicated.
“As we’ve said since the beginning of this process, the PUCT will develop a reliability service as directed in Senate Bill 3,” Parsons said, referring to the grid reform law passed in 2021. “The PUCT published multiple options for consideration and eagerly awaits public comments on all options. Once the Commission holds a vote on a preferred reliability service, we will present it to the legislature next session.”
The implication could be a stunning setback for the agency and its commissioners, who were handpicked by Gov. Greg Abbott after every preceding commissioner was either fired or resigned in the aftermath of the winter storm.
Last month, the Public Utility Commission, led by Chairman Peter Lake, proposed an untested market design called the “performance credit mechanism,” which would require electric utility companies to purchase credits, which are then awarded to power plants that deliver on promises to produce electricity when the state’s demand peaks.
The market design has never been tried in the U.S., and its uniqueness has appeared to flummox industry insiders. A lack of details and the idea’s complicated nature led several senators to express skepticism during a recent meeting of the Business and Commerce Committee.
Lawmakers’ dubious reaction to the proposed redesign appears to have morphed into a red light after senators heard testimony that the untested marketplace would make investors skittish to commit to building coveted natural gas plants in Texas.
“It is not in the best interest of our constituents to support any proposal that further delays investments in new dispatchable generation, and the Commission should carefully consider the unintended consequences of any type of proposal that creates more uncertainty for the market participants,” the letter said.
Dispatchable generation is code for power plants that can be turned on at the flick of a switch. In Texas, that generally means natural gas fueled power plants.
Many lawmakers have come to view the construction of natural gas fueled power plants as a critical need to shore up Texas’ electric grid following the February 2021 freeze that brought the grid to the brink of collapse. However, malfunctions and supply issues at natural gas power plants played an outsized role in the widespread blackouts that led to the deaths.
The senators’ objections to the market design came very late in a process that the Public Utility Commission intended to complete before lawmakers return to Austin next month. The commission has attempted to avoid pressure from politicians, including the governor, to attack renewable energy.
Lake, the commission’s chairman, said at its unveiling that the market design he recommended would spur investment in natural gas power plants. But he has also tried to thread the needle by claiming all efforts to overhaul the power grid were designed to be “resource neutral.”
That could be coming to an end, as Schwertner and even Democrats such as Dallas Sen. Nathan Johnson signed on to the letter, more or less indicating that they will create obstacles for any market design that doesn’t directly favor natural gas power plants.
Lawmakers in the Texas House will have a chance to weigh in on the proposed market redesign on Monday, when it is presented to the State Affairs Committee.
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