Even for us “insiders,” trying to keep up with everything that is happening in state government at the Public Utility Commission of Texas, the Electric Reliability Council of Texas (ERCOT), the Texas Railroad Commission, and the Texas Legislature as they consider potential changes to our “energy-only” market following last winter’s climate disaster is well… dizzying.
Just over the last week or so, the Federal Energy Regulatory Commission (FERC) released preliminary recommendations on their findings from Winter Storm Uri, the Public Utility Commission requested comments and any new “ideas” by September 30, and to top it off, there was a contentious and feisty interim committee meeting in the Senate Committee on Business and Commerce, in which the Dean of the Senate - Sen. John Whitmire - told the Executive Director of the Railroad Commission of Texas that their draft rule to eventually require weatherization of the natural gas supply “sucks.”
So let’s break it down a bit.
First, FERC released some preliminary recommendations, with a full report coming in November. Our take? The preliminary recommendations are a pretty good start, and they’re confirmation that Texas messed up by not taking seriously the threat of weather extremes (i.e., climate change) and the need to make our electric system more resilient. See here for our statement.
Second, on the heels of the last Public Utility Commission workshop, which finally focused on energy efficiency and demand response (see here for a recap), the Commission asked for comments on the potential to increase Emergency Response Service and to lower the overall price cap from a maximum of $9,000 to $4,500 per megawatt-hour (MWh) to protect consumers better. Our response? Yes and yes! We should expand Emergency Response Services and we should lower the cap which has led to customers facing huge bills.
Third, the PUC asked for stakeholders to put forward ideas on how to improve the market. More than 20 proposals were submitted, which varied from “pay all gas power plants lots of extra money to assure reliability” (a position taken by the Lower Colorado River Authority, a big gas proponent), to a slightly more refined proposal by coal giant Vistra, to an even more nuanced proposal by fellow gas and coal burner NRG Energy that would put a new “reliability” obligation on all load serving entities (from Austin Energy to NRG’s electric provider Reliant).
While we think the NRG proposal may be less damaging than the two others, since it allows the use of renewables plus storage as well as demand response to meet the obligations (though at a discounted factor), we would prefer a plan that is centered on helping actual residential customers. Namely, increasing our energy efficiency goals to five times as large as they are now, requiring load serving entities to provide reliability through a “Distributed Energy Resource” obligations (think local solar and demand response), and a new daily “peak-ahead” service/market to meet the few hours when things go haywire due to sudden changes in the weather. To see copies of our comments and many others, please visit this PUC site under Project 52373.
We will continue to call on the PUC to hold a real public hearing on these proposals, and not just offer “industry-insider” workshops with no opportunity for input from individuals and community groups.
And yes, the Texas Senate also held a hearing this week. If you want to hear the whole thing, tune in here. But suffice it to say there were fireworks. Chair Charles Schwertner stated he was thinking about floating an idea of using federal funds to provide grants or loans to build “steel on the ground” (an idea rejected by several other Senators in the committee and several market participant like Vistra). Several industry insiders offered their so-called solutions - i.e., Vistra, LCRA, and NRG. There were lots of opinions expressed about demand response, renewables, gas, and the fact that people were hurt, and many even died, in Winter Storm Uri.
But the highlight of the hearing was definitely the exchange between Senators and Railroad Commission Executive Director Wei Wang. At issue was the draft rule put out recently by the Railroad Commission of Texas that could lead to future weatherization of the fracked gas supply chain. Currently, roughly half of ERCOT’s electricity is derived from gas, so if gas doesn’t physically get to power plants in high or low temperatures, it can lead to the rolling blackouts like we experienced last February. Indeed, the FERC’s initial report made clear that many of the problems experienced by millions of Texans were due specifically to power plants being unable to get fuel from the gas companies, even as the gas companies made billions in profits from the winter freeze. Under the proposed rule furnished by the Railroad Commission of Texas (with comments due by November 1), any entity can, with a simple form and a $150 fee, declare itself exempt from weatherization requirements, and simply stating that “it would be difficult to meet these requirements” would suffice.
The proposed rule does technically comply with the provisions passed by the Legislature earlier this year. Unfortunately, the Legislature rejected amendments by several Democratic representatives like Reps. Jon Rosenthal, Chris Turner, and Donna Howard that would have required more specific requirements and deadlines, but most Senators were not impressed with Wang’s proposal. Sen. Whitmire, in particular, was incensed, but so too were Chair Schwertner, Sen. Lois Kolkhorst, and others. At one point, Whitmire told Wang, “congratulations, you have managed to unite this entire committee” against the proposal. Wang promised to take it back to the Commissioners for refinement.