There is no guarantee that the PUC changes will lower costs for consumers
As the anniversary of the devastating February 2021 winter storm approaches, the Public Utility Commission of Texas approved reforms that it claims would fix the issues related to our grid.
Like other young environmentalists of my generation, I care deeply about the resiliency and sustainability of our grid, and I, of course, hope for a long-term solution after that winter storm. However, the reform put forward by the PUC is woefully short of what our state needs to meet its long-term energy demands. The Legislature should reject it.
To add some context, there were multiple suggestions in the air when it comes to what is best for fixing the Texas power grid. Peter Lake, chairman of the PUC, championed the performance credit mechanism, which was ultimately approved by the commission last week. The PCM is a system that would function by providing credits to power generators for showing enough capacity ahead of a time of high demand. A report by the Texas Consumer Association estimated that this model would cost an extra $460 million a year, adding up to $22.8 billion by 2030.
Another proposal favored by PUC Commissioner Lori Cobos is the back stop reliability service, a system that would provide funds so older fossil foul plans stay operational. An analysis shows that it would provide 90% more capacity to our grid at a much-reduced price of 2.9 billion over 10 years compared to the performance credit mechanism. The third option for grid redesign is the dispatchable energy service with the backing of Commissioner Jimmy Glotfelty. This model is a scaled-down version of the performance credit mechanism, with credits going to power generators that handle fast-acting energy sources like gas plants.
All three of these proposals would be a major change in how our grid market operates. The performance credit mechanism model, for instance, would fundamentally change how wholesale power is bought and sold in Texas. Now, the PCM proposal is headed to the Texas Legislature, where it’s sure to face some opposition from state senators, state representatives and several notable experts in the field.
The issue with our power grid isn’t our competitive, deregulated system. In fact, this system has greatly benefited Texas. Low energy costs were a factor for 62 corporations deciding to relocate to Texas in 2022. As a young conservative environmentalist, who like many others is planning to make a future here in Texas, this proposal fails my expectations. I’m not alone in disappointment with the PUC. My fellow Texans and members of the Texas Legislature share this view.
Following the disaster that was the 2021 winter storm, I expected reforms that would address the heart of the issue: winterization. A report, conducted by the UT Energy Institute, concluded that a lack of winterization and on-site fuel was the major factor in our grid failure. All sources of energy, from wind and solar to nuclear to natural gas, were affected by the extreme cold temperatures, ultimately leading to blackouts. The goal should not be to fix what isn’t broken — our deregulated market — but to bolster our energy infrastructure so that it can withstand weather events.
With that in mind, ERCOT, the grid operator for Texas, has engaged in Phase One upgrades to our grid infrastructure, spending $1 billion since the 2021 storm. We should continue these efforts with Phase Two upgrades, including addressing the lack of efficiency in our power grid, a step that could save Texans money and cut down emissions. Knowing this, it’s nonsensical for the PUC to favor market redesigns that do nothing to address winterization while forcing Texans to pay more in utility bills.
Regarding costs, there is no guarantee that the PCM will lower costs for consumers. In fact, there’s evidence to the contrary. If the PUC actually cared about the consumer, they would not have approved a plan that increases costs for the average Texan. This market design solution has never been tried before, and it would make an experiment of the Texas grid at a dangerous time. Not to mention, the credit mechanism works only for dispatchable load-energy sources like natural gas, coal and nuclear power; renewables like wind and solar would be left to the wayside by the performance credit mechanism.
As Texas continues to grow — with more than 500,000 people moving here every year — our state needs further investment in power generation, not in symbolic solutions that will be more trouble than they’re worth. The performance credit mechanism model threatens one of the most valuable and unique aspects of the Texas grid: our flexible, deregulated energy market. Young conservatives who care about the environment and our state have one message for the Texas Legislature while considering this proposal: Don’t mess with Texas energy.
Zack Abnet is the Texas state director for the American Conservation Coalition. He lives in Dallas. He wrote this column for The Dallas Morning News