The Texas grid overhaul plan has sparked a showdown at the State Capitol.

It’s been nearly two years since the major blackout in 2021, and most people agree that the Texas power grid still needs to be “repaired.” The question is how.

There’s a fight brewing in the State Capitol over this very issue. This pits powerful industries, politicians and regulators against each other, and it will affect energy bills, grid reliability and the environment.

But it all hinges on a shaky policy proposal from the Texas Public Utilities Commission.

After the last major power outage, state legislators passed Senate Bill 3, which called for the commission to improve the reliability of the power grid. So the commissioners are working to change the state’s electricity market. They want to change how energy is bought and sold in the grid to create a market that guarantees that electricity is available when people need it.

To do this, the commission hired a consulting firm that developed a plan called the Performance Review Mechanism, PCM for short.

Essentially, the plan would create reliability credits that electricity providers (the companies that most Texans pay their electricity bills to) must buy from electricity generators (the companies that own the power plants). The loans represent the obligation of these electricity producers to supply electricity when the grid is at its busiest.

“I believe that PCM is the right solution because it is a complete solution that sets a clear standard for reliability in line with the requirements [Senate Bill] 3,” Utilities Commission Chairman Peter Lake said earlier this month.

The consulting firm behind the plan says it will cost $5.7 billion more per year. Proponents say power producers will use the money to invest in new power plants and maintain power during extreme weather. They also argue that not all of this extra money will fall on the shoulders of consumers. But in Texas, consumers typically incur additional costs.

Game state

The plan is supported by the owners of power plants, who will have to earn on loans. The Texas Power Reliability Board, the state’s grid operator, advocates for this. Gov. Greg Abbott and Abbott-appointed utility commissioners, including Lake, also support PCM.

The list of opponents looks much longer.

An independent market watcher acting as an independent auditor of the Texas power system doesn’t think this is a good plan. Consumer and environmental groups oppose it or are skeptical. This is opposed by the Texas Manufacturers Association, which represents the state’s major industrial energy consumers. The oil and gas lobby is not convinced that this will work, and many government politicians are against it.

This group of opponents represents different interests, so their reasons for opposing the PKM are different.

Environmentalists say the plan is designed to increase the number of natural gas-fired power plants in Texas, which is bad for climate change and air pollution.

Others who want more natural gas plants to be built argue that PCM may not achieve this goal. Some would prefer more direct subsidies for new power plants rather than adding a new layer of regulation to the already complex Texas power market.

And others say the energy market doesn’t even need a major overhaul, and that the grid can be improved without investing billions in building new power plants.

“I think we have a problem with operational flexibility,” Carrie Bivens, an independent PUC market watcher, told a state Senate committee late last year. “I don’t believe we have [an energy] throughput problem.

All opponents agree on one thing, that the plan has not been tested. It will cost billions, but there is no real world example to show that it will work.

Move forward

Despite those concerns, the Public Utilities Commission approved the PCM plan last week in a showdown in the Texas Legislature.

In Thursday’s vote, the commission accepted the draft plan, but said it would delay its implementation “until the 88th Legislature has had an opportunity to make a judgment on the merits of the PCM and/or make an alternative decision.” ”

This could mean that lawmakers are being asked to weigh in on new legislation. But if they don’t, government regulators will take this inaction as a green light for the plan to go ahead. KUT has emailed the Public Utilities Commission to clarify how it expects the legislature to respond, but has yet to hear back.

One way or another, state legislators have already begun to react. State Senator Charles Schwertner, who sponsored the bill to overhaul the grid last session, called the approval of the PCM by the Public Utilities Commission “unacceptable” hours after the vote.

“Today, [Public Utility Commission] chose to ignore a clear direction [Legislature]” claiming PCM, Schwertner tweeted. “In the coming weeks, the Texas Senate will hold hearings and consider any legislation necessary to correct this error and fulfill our obligation to the people of Texas.”


Copyright 2023 CUT 90.5. To see more, visit KUT 90.5.

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