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In a letter last week and at a committee meeting on Monday, Texas House and Senate lawmakers asked the Public Utilities Commission, which regulates the state’s electricity market, to suspend the planned overhaul of the electricity market until the legislature can assess it.
After the power grid crisis during the February 2021 winter storm that left millions of Texans in the dark for days of power outages and caused hundreds of deaths, the Texas Legislature ordered the PUC to bring several major changes, including requiring power plants to better prepare for very cold conditions and the establishment of a “reliability standard” for the state electricity market.
The PUC’s preferred proposal would leave the basics of the market unchanged – a supply and demand model that relies on price and gives the greatest financial benefits to generators who can produce the cheapest electricity. But it would add financial rewards to power plants that can generate electricity quickly when the grid is under the most stress, such as on very hot or very cold days.
The rule, if implemented, would punish those who failed to produce the electricity they promised with financial penalties.
The agency has already implemented the “wintering” regulation that the Legislature passed in 2021. Now officials are scrambling to determine how the Texas electricity market will create and meet the reliability standard. also imposed by Senate Bill 3.
During PUC Chairman Peter Lake’s testimony to the House State Affairs Committee on Monday, lawmakers questioned whether the proposal would actually achieve what many Republican members seemed to want most, and what Lieutenant Governor Dan Patrick has already demanded: a guarantee that more natural gas plants will be built in Texas.
“Does your plan guarantee the next generation? asked state Rep. Todd Hunter, R-Corpus Christi.
“Yes, sir,” Lake replied. If the agency completes developing its rules as planned, Lake said during the hearing, he expects the plan to be fully implemented by 2026.
Last week, senators on the Business and Commerce Committee, after hearing similar testimony from Lake, wrote a letter to PUC commissioners expressing concern that the PUC’s proposal might not meet the requirements. of Senate Bill 3 and would not guarantee that the next generation will be built “in a timely and cost-effective manner.”
Also last week, Patrick held a press conference where he called for legislation that would see additional natural gas-fired power plants built on top of the market changes proposed by the PUC. He called renewable energy sources a “luxury”.
Wind turbines and solar panels, which typically don’t provide as much power in the winter months as they do in the summer, are the fastest growing energy sources in booming Texas.
“Demand is growing at a rate that exceeds [quickly available power] generation in the state,” Pablo Vegas, CEO of the Electric Reliability Council of Texas, which operates the state’s electric grid, told lawmakers Monday. He pointed out that even with winterization requirements, ERCOT’s own analysis still indicates that there are extreme weather scenarios that would lead to the grid not having enough power to avoid power outages.
With the state’s rapid population growth, “this situation is getting tougher and tougher every year,” he said.
At a press conference last week, both Vegas and Lake stressed that the proposed changes would be “technology agnostic” and would not prioritize one source of power generation over another. Instead, the PUC plan would prioritize technology that can quickly turn power on and off across the grid to balance renewable power generation dips when the sun isn’t shining or the wind isn’t blowing. . In Texas, that would largely mean new natural gas plants.
Lake declined to respond directly to the senators’ letter during Monday’s House hearing, but said the agency was “grateful for the comments.”
“I agree that we need more dispatchable power,” Lake said. “We need a reliability standard.”
Lake said many changes, including better weatherization, have already improved network performance, and that if it hadn’t been for new regulations imposed by the legislature in 2021, the state’s network would have experienced an “emergency condition” eight times. or power outage” in the past 18 months.
Hunter and Rep. John Smithee, R-Amarillo, repeatedly asked Lake whether the PUC’s vote on the Marketplace Overhaul — which is expected in January after the public has had a chance to comment on the plan — would be binding and whether the legislature would have the opportunity to make changes to it.
Lake said the agency was just moving forward with what the Legislature asked it to do last year with Senate Bill 3, but later said, “We don’t plan to ‘operationalize market designs until we receive guidance from the Legislative Assembly.’
Rep. Richard Peña Raymond, D-Laredo, said he doesn’t understand why Senate lawmakers asked the PUC to put the brakes on his proposal. “It looks to me like we asked you to do something, and you are doing it,” he said.
He implored his colleagues to focus on the task at hand: “What I hope, members, is that we can try to figure out how to take Texas to the next stage, to the next decade… [because] the demand continues to increase, and continues to increase.
Michele Richmond, executive director of Texas Competitive Power Advocates, an industry group that represents large power companies, said its members are ready to build new gas-fired power plants in Texas between 2024 and 2026 capable of producing 4,600 megawatts. electricity “if the Legislature does not prevent implementation” and the PUC rulemaking process continues as planned.
Companies are unlikely to start investing in building new factories until the law is clear, she said.
Lake said that currently, based on an analyst report commissioned by the PUC, the Texas grid can be expected to experience power outages at least one day per year on average. The PUC proposal aims to reduce this risk to once per decade.
“Any power outage expected each year is unacceptable,” Lake said, pointing out that many coal and natural gas-fired power plants, which can typically produce power consistently during times when renewables cannot. cannot, are closed. Many are no longer cost competitive.
“The threat is real and it is happening,” he said. “We are losing megawatts, but we have more people, more businesses.”
Disclosure: Texas Competitive Power Advocates financially supported The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the journalism of the Tribune. Find a full list here.
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