Texas

Texas Electricity Bills Will Rise if Regulatory Approved Power System Overhaul Is Done

Austin. Texas power grid regulators on Thursday approved a major overhaul of the Texas power grid that will push up electricity bills for consumers as officials seek to spur the construction of new natural gas-fired power plants.

Politicians and commissioners from the Public Utilities Commission remain focused on building natural gas-fired power plants in their efforts to address reliability shortcomings in the ERCOT power system by changing how electricity is bought and sold in Texas.

After weeks of deliberation and countless hours of testimonies, the panel’s members reached the conclusion of a complex market design known as the “performing credit mechanism”, which goes against the advice of the panel’s paid consultant, independent market watcher ERCOT, and contrary to state senators who have called for stop the process.

Critics say the new market design shifts costs and risks to consumers but does little to encourage the construction of coveted natural gas-fired power plants.

“It’s a blank check for generators with no consequences,” said Austin-based energy consultant Doug Levine.

Supporters, including a trade group representing Texas energy giants, said the new market would lead to reinvestment in the Texas power grid. PUC officials believe that this will increase consumers’ electricity bills by 2%.

It was unanimously voted to create a secondary market that has the potential to be a major windfall for companies operating natural gas power plants. The reference project involves providing potentially lucrative loans to power plants that deliver on promises to generate electricity when demand is high and stocks are low.

Its approval faced almost immediate resistance from Georgetown Republican Senator Charles Schwertner, the author of Senate Bill 3 of 2021 that launched the market restructuring, who said in a letter to the PUC last week that it would be “unwise” for the commission to approve a capital repairs without consulting the Legislative Assembly.

After the vote, Schwertner called their actions “unacceptable”.

“To be clear, SB 3 did not direct the PUC to replace the state’s power market with an overly complex, capacity-focused design that puts the competitive market at risk by not guaranteeing the delivery of controlled generation,” Schwertner said in the letter. to the PUC.

Schwertner said he would hold hearings to pass the new legislation to “meet our obligation to protect the people of Texas.”

The idea of ​​a credit-for-performance mechanism emerged just two months ago and was dead on arrival after energy insiders expressed skepticism about the market structure, which was criticized as overly complex and untested. The energy firm, which was paid $600,000 to review the redesign, said the model “carries significant risk due to its novelty.”

Within weeks, every member of the influential Senate Business and Commerce Committee signed a letter calling for a halt to the process after a rather painful Capitol hearing.

However, a pledge from the Texas Competitive Power Advocates trade group, which includes Texas electric giants Calpine, NRG and Vistra Corp., breathed new life into the proposal after organization leader Michelle Richmond testified at the Capitol that 4,500 megawatts of new energy generation will be built if the model is accepted.

Gov. Greg Abbott cited Richmond’s pledge in a public letter declaring his support for the market model, and commissioners detailed that pledge during today’s deliberations.

“Today’s adoption of PCM is an important step towards building a service of reliability that will make it cost-effective for companies to invest in the new managed production needed during periods of low renewable energy productivity at ERCOT,” Texas Competitive Power Advocates said in a statement. said, referring to fast-acting power plants, which in Texas are most commonly referred to as natural gas-fired plants.

Thursday’s vote is a major milestone for the Public Utilities Commission, which has been fully resurrected after the entire leadership of both the commission and grid operator ERCOT either resigned or were fired following a near-collapse of the power grid in 2021, resulting in death over 200 Texas residents.

After the freeze, the ERCOT market was still based on a scheme that rewards electricity producers for capitalizing on price spikes that occur when demand for electricity outstrips available supply. PUC Chairman Peter Lake has repeatedly called it a “crisis” market that regulators hope to keep in part because of the low electricity prices it has created, discarding aspects that undermine its stability.

It is hoped that a “performance credit facility” will be the solution.

“This is a big step for ERCOT, and I appreciate the leadership and support from the Legislature and the Governor since the last session – significant historic legislation that led to action here today,” Lake said.

What the committee members approved on Thursday was a roadmap made up of a number of points. ERCOT will be responsible for creating many of the technical details, while the PUC will discuss the larger policy issues. PUC officials estimate that implementation could take up to four years.

Lake, meanwhile, said that after Thursday’s vote, the PUC would “put on the brakes” and “go to the Legislature to consider its options throughout the legislative session.”

Your electricity bill in Texas is going up. And your gas bill. But how much?



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