By Cyrus Reed
After months of inaction by state leaders, the Lone Star Chapter of the Sierra Club has submitted a petition for rulemaking with the Public Utility Commission of Texas (PUC) that would require the state’s eight private utilities to nearly double their peak demand goals and quadruple their energy saving goals over the next three years. This would benefit thousands of Texas families and small businesses and would help make our grid more resilient and reliable. The PUC now has up to 60 days to either approve the petition and move forward with the recommended rulemaking process, reject the petition, or open a separate project related to the petition. In the meantime, you can sign our online advocacy petition now to urge the PUC to act!
Update on Aug. 18: This week the PUC officially acknowledged receipt of our rulemaking petition and invited public comments. The PUC is now required to consider our petition. Any stakeholder or member of the public can view our petition and make comments until Sep. 16. All comments should reference Project Number 53971. To file a comment, go here.
Why is the Sierra Club taking this action?
Quite simply, we are tired of waiting. To its credit, the PUC opened a broad project on the market changes needed to fix the grid, and it did hold a series of workshops in 2021 to assess the needed changes. Among the issues discussed were how to increase the energy efficiency of homes and businesses and how to make sure customers have access to programs that help shift demand during peak summer days and cold winter mornings. Nevertheless, despite approving some changes in December 2021 and promising to assess the programs run by private utilities, meaningful progress just hasn’t happened.
In the meantime, all eight of these private transmission and distribution utilities have filed their energy efficiency plans for 2023, and none offer any substantial changes. What’s worse: Under current PUC rules, these same utilities are able to offer a “performance bonus” that sends roughly a third of their proposed budget back to utility shareholders – and not to programs that help customers save energy and money.
What’s in the petition for rulemaking?
We are proposing eight basic changes to the requirements under PUC rules.
- Raise peak goals. We call on the PUC to raise the minimum goals set by the Legislature – 0.4% of peak summer demand – to 0.7% by 2025. Why 0.7%? Well, back in the day, more than 10 years ago, the Legislature asked the PUC to assess whether 0.7% would be a reasonable goal, and an independent study said yes it was. The PUC never acted. Let’s finally do what we should have done a decade ago.
- Make sure the utilities can meet the summer peak goal and an equivalent winter peak goal. We all saw what happened during Winter Storm Uri. A lack of supply coupled with a huge spike in demand caused massive brownouts, deaths, and suffering. And yet utilities are almost exclusively focused on summer programs even though state statute requires that utilities focus on both. We want to change the PUC rules to also require that utilities do both.
- Substantially increase energy savings goals. In addition to peak goals, the PUC requires utilities to meet energy savings goals. But these are so low they are meaningless. Our petition would raise the goals for our utility programs – from about 0.25% of total residential and commercial consumption today to 1% by 2025.
- Make a more targeted investment in programs that help Texans who struggle to pay their utility bills. Under our petition, utilities would have to double what they spend on so-called “hard-to-reach” and “low-income” programs from 10% of their program budget to 20% over the next three years.
- Give utilities “credit” for reducing transmission and distribution investments because of reduced demand on the system. Each year, the PUC judges utilities on a cost-effectivity test based on the amount of generation capacity that is reduced because of the energy efficiency programs and the amount of reduced energy costs. We are proposing to add a third category – delayed infrastructure needs in distribution and transmission investments due to reduced energy demand – that would determine if the programs are cost-effective, giving more flexibility to the utilities.
- Judge the utility on the cost-effectiveness of the portfolio of its programs, not on each individual program. This again will give an incentive to utilities to offer more programs even if some are not as cost-effective as others, as long as the total portfolio of programs is cost effective.
- Double the residential and commercial cost cap over the next three years. For residential consumers, the maximum amount a utility can currently spend on energy efficiency programs is set by the PUC at $1.43 cents per month on an average bill. Our proposal would increase this amount over the next three years to $3, which is roughly what is spent by the leading public utilities in Texas, like Austin Energy and CPS Energy. We proposed a similar increase in the commercial cost cap.
- Limit the performance bonuses that utilities can earn for exceeding the mandated goals. The current approach lets utilities claim up to 10% of the avoided costs of the programs as bonuses. We would limit it to 15% of the program costs, essentially a return on their investment. Wait, isn’t 15% more than 10%? Yes, but because total avoided costs are much larger than program costs, large private utilities like Oncor and CenterPoint Energy have been earning bonuses of roughly 30 to 40% of the total program budget, which is extreme.
What’s Next?
Commissioners could act on our rulemaking petition as soon as next week, when they meet on Aug. 25, or really any time within the next 60 days. We urge them to either approve it or at the very least open up their own rulemaking on energy efficiency programs to receive stakeholder input.
What Can You Do?
Without action on our petition, the PUC is expected to approve extremely weak energy efficiency plans by major energy utilities like Oncor, Entergy, Centerpoint, and AEP. Utilities are essentially telling the public they are totally fine with doing little to expand energy efficiency for everyday Texans. Energy efficiency demand reductions and savings would remain the same if the PUC approves these plans. Even worse, the utilities are asking for giant bonuses that equal roughly a third of the proposed budgets just for exceeding their modest goals.
That’s where you come in. We need People Power.
With extreme hot weather conditions continuing through our record-breaking summer, here are five things you can do:
- Protect and look out for yourself, your family, and your neighbors. Make sure their needs are met.
- Organize! Connect with other Texans to focus our collective anger toward Gov. Greg Abbott and the PUC.
- Reflect and remember your story of living through the winter storm and the new normal of wondering if the power will go out.
- Sign our online advocacy petition here. Right now, we have hundreds of signatures asking the PUC to raise energy efficiency goals but we need more support. Signing on will continue to build support for our proposed rulemaking.
- Speak out in person at the next PUC meeting in Austin on Aug. 25 at 9 a.m. (we can connect you with a volunteer in Austin if you can’t make it). To connect with our team, email shane.johnson@sierraclub.org.
Remember, reducing demand is the cheapest, cleanest, and quickest way to fix our grid! Gov. Abbott and the PUC need to hear your voice on this crucial issue!