Texas lawmakers ask state agency to delay power market redesign

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In a letter final week and in a committee assembly Monday, Texas lawmakers from each the House and Senate have requested the Public Utility Commission, which regulates the state’s electrical energy market, to maintain off on its deliberate electrical energy market redesign till the Legislature can consider it.

After the power grid disaster in the course of the February 2021 winter storm that left hundreds of thousands of Texans in the dead of night throughout dayslong power outages and prompted a whole bunch of deaths, the Texas Legislature ordered the PUC to make a number of main modifications, together with requiring power crops to higher put together for very chilly situations and implementing a “reliability standard” for the state’s electrical energy market.

The PUC’s favored proposal would go away the fundamentals of the market unchanged — a supply-and-demand mannequin that depends on worth and offers the most important monetary advantages to turbines that may produce the most cost effective power. But it will add monetary rewards for power crops that may shortly produce electrical energy when the grid is at its most confused, corresponding to throughout very popular or very chilly days.

The rule, if carried out, would punish those that failed to produce the power they promised with monetary penalties.

The agency has already carried out the “winterization” regulation the Legislature handed in 2021. Now, officers are working to decide how the Texas power market will create and meet the reliability customary additionally mandated by Senate Bill 3.

During PUC Chair Peter Lake’s testimony earlier than the House State Affairs Committee on Monday, lawmakers questioned whether or not the proposal would truly obtain what many Republican members appeared to most need, and what Lt. Gov. Dan Patrick has already demanded: a assure that extra pure gasoline crops can be in-built Texas.

“Does your plan guarantee new generation?” requested state Rep. Todd Hunter, R-Corpus Christi.

“Yes, sir,” Lake responded. If the agency completes its rule-making as scheduled, Lake mentioned in the course of the listening to, he expects that the plan could be absolutely carried out by 2026.

Last week, senators from the Business and Commerce Committee, after listening to comparable testimony from Lake, wrote a letter to PUC’s commissioners expressing their concern that the PUC’s proposal could fail to meet the necessities of Senate Bill 3 and wouldn’t assure that new era can be constructed “in a timely and cost effective manner.”

Also final week, Patrick held a press conference through which he referred to as for laws that will trigger extra natural-gas-fired power crops to be constructed as well as to the PUC’s proposed market modifications. He referred to as renewable sources of vitality “a luxury.”

The fastest-growing sources of power in fast-growing Texas are wind generators and photo voltaic panels, which generally don’t present as a lot power in the course of the winter months as in the course of the summer season.

“Demand is growing at a pace that is outpacing [quickly available power] generation in the state,” Pablo Vegas, CEO of the Electric Reliability Council of Texas, which operates the state power grid, advised lawmakers on Monday. He identified that even with the winterization necessities, ERCOT’s personal evaluation nonetheless factors out that there are some excessive climate eventualities that will lead to the grid not having sufficient power to keep away from rolling blackouts.

With the state’s fast inhabitants progress, “this situation is getting more difficult and more challenging every year,” he mentioned.

During a press conference last week, Vegas and Lake each emphasised that the proposed modifications could be “technologically agnostic” and wouldn’t prioritize one supply of power era over one other. Instead, the PUC plan would prioritize know-how that may shortly swap power on and off all through the grid to stability drops in renewable power era when the solar doesn’t shine or wind doesn’t blow. In Texas, that will largely imply new natural-gas-fired crops.

Lake declined to reply straight to the letter from senators in the course of the House listening to Monday however mentioned that the agency is “grateful for feedback.”

“I agree we need more dispatchable power,” Lake mentioned. “We need a reliability standard.”

Lake mentioned lots of the modifications, together with higher weatherization, have already improved the grid’s efficiency and that with out the brand new rules directed by the Legislature in 2021, the state grid would have skilled “emergency condition or blackout” eight instances within the final 18 months.

Hunter and Rep. John Smithee, R-Amarillo, repeatedly questioned Lake about whether or not the PUC’s vote on the market redesign — which is anticipated in January after the general public has a chance to touch upon the plan — could be binding and whether or not the Legislature would have the chance to make modifications to it.

Lake mentioned that the agency was merely shifting ahead with what the Legislature requested it to do final yr with Senate Bill 3 however later mentioned, “We don’t plan on operationalizing any market designs until we receive guidance from the Legislature.”

Rep. Richard Peña Raymond, D-Laredo, mentioned he doesn’t perceive why lawmakers within the Senate requested the PUC to hit the brakes on its proposal. “Seems to me we asked you to do something, and you’re doing it,” he mentioned.

He implored his colleagues to deal with the duty at hand: “What I hope, members, is that we can try to figure out how to get Texas to the next step, to the next decade … [because] the demand continues to go up, and continues to go up.”

Michele Richmond, the chief director for Texas Competitive Power Advocates, an trade group that represents giant power firms, mentioned her members have been ready to construct new gas-fired power crops in Texas between 2024 and 2026 able to producing 4,600 megawatts of power “if the Legislature does not inhibit the implementation” and the PUC’s rule-making course of continues as deliberate.

Companies are unlikely to start investing in constructing new crops till the regulation is obvious, she mentioned.

Lake mentioned that proper now, in accordance to an analyst’s report commissioned by the PUC, the Texas grid will be anticipated to expertise rolling blackouts no less than at some point per yr on common. The PUC’s proposal goals to cut back that threat to as soon as per decade.

“Any blackouts expected each year is unacceptable,” Lake mentioned, declaring that many coal- and natural-gas-fired power crops, which might usually produce power persistently throughout instances when renewables can not, are being shut down. Many are now not value aggressive.

“The threat is real, and it’s happening,” he mentioned. “We’re losing megawatts, but we have more people, more businesses.”

Disclosure: Texas Competitive Power Advocates has been a monetary supporter of The Texas Tribune, a nonprofit, nonpartisan news group that’s funded partially by donations from members, foundations and company sponsors. Financial supporters play no position within the Tribune’s journalism. Find a whole list of them here.