How the Texas Legislature could reform the state’s power grid this session
State lawmakers are close to passing sweeping legislation to overhaul the state’s power grid following the disastrous and deadly winter storm in February that left more than 4.8 million homes and businesses without electricity for days. More than 100 people died.
As time runs out in the legislative session, the Texas House and Senate will need to hammer out differences between the two chambers’ power grid proposals and quickly move the legislation in the coming days. The Tribune will update this post until the session ends.
Texas may soon approve a bill to require power generation companies to better prepare their facilities to withstand extreme weather.
The requirement for power generators and transmission lines to “weatherize” has broad support in both the House and Senate for inclusion in Senate Bill 3, a sweeping piece of legislation that attempts to overhaul the state’s power grid laws.
However, lawmakers are still debating whether natural gas facilities and pipelines will also be required to make such upgrades. The House added such requirements, and the measure is headed to a conference committee to iron out the differences unless the Senate accepts the change.
The power grid overhaul may also ultimately leave out reforms to encourage residents and businesses to conserve electricity; a House amendment to require regulators to perform a cost-benefit analysis on energy efficiency programs was withdrawn.
The legislation also does not require more weatherization for homes, pipes and other consumer infrastructure. Experts called that a significant oversight during hearings on the legislation.
Texas could help fund backup power generation for critical water, health care and electric facilities under the House’s current version of Senate Bill 3, a sweeping piece of legislation that overhauls the state’s power grid laws.
During the winter storm, hundreds of public water systems in Texas were disrupted and millions of people lost access to safe drinking water. The loss of electricity at nursing homes and dialysis centers created life-threatening conditions for patients. More than 1,400 people sought care at emergency rooms and urgent care clinics for carbon monoxide poisoning, and at least 11 people died.
A House amendment to SB 3 would create a grant program for projects that improve the resiliency of water, electric and health care infrastructure. Texas does not require carbon monoxide alarms in homes, and there is currently no proposal advancing in either body to do so.
Under the House’s version of the bill, natural gas companies would be required to register facilities that supply critical power plants with fuel to register as “critical infrastructure” so that electricity isn’t disconnected during an emergency; many failed to do the registration paperwork, and as a result, some power plants couldn’t get the fuel they needed to produce electricity.
The measures are likely headed for a conference committee, where senators and representatives will iron out the differences between the two chambers’ versions of the bill, unless the Senate accepts the House amendment.
Most Texans will likely have higher charges on their power bills for years to come to cover gas utilities’, electric cooperatives’ and electric companies’ financial losses from the storm and prevent customers from having to pay huge bills in a short time.
Lawmakers are close to passing bills that would allow companies to seek billions of dollars in state-approved bonds backed by charges on customers’ bills to stabilize the state’s distressed energy market.
After state electricity regulators set power prices at the maximum rate, $9,000 per megawatt-hour, and natural gas fuel prices spiked during the storm, many companies — especially natural gas utilities and rural electric cooperatives — were financially wrecked. Others owe massive debts to the Electric Reliability Council of Texas.
The Senate also approved a proposal in the early hours of May 27 to allow electric companies, including retail electric providers, to finance an additional $2.1 billion for electricity that companies paid for but never received during the storm, as well as additional charges from the high wholesale power prices. The Senate has pushed hard for a financial remedy to the infamous 32-hour period during the week of the storm when regulators kept wholesale power prices at the $9,000 cap after more electric generation came online. Many people dubbed that controversial decision a regulatory pricing error.
Additionally, House Bill 4492 would loan $800 million to ERCOT through the State’s Economic Stabilization fund, known as the rainy day fund, to pay for debts to the grid operator. ERCOT acts as a transaction house for the electricity market, so when companies couldn’t pay their debts after the storm, other companies got shorted for the electricity that they sold. ERCOT will pass on the cash to companies that are owed money.
The state’s rainy day fund ended 2020 with a balance of nearly $10 billion.
The House and Senate still have different proposals for the mechanisms of how all of the financing proposals will work. The details will soon be discussed behind closed doors in conference committees.
In the days leading up to February’s winter storm, Texans were not warned about the prospect of widespread power outages lasting for days in freezing temperatures. At least 4.8 million homes and businesses lost power and didn’t know when it would return.
While power was out, the Texas Division of Emergency Management didn’t provide accessible and life-saving updates on outages and inclement weather.
Now, Texas lawmakers are moving to study and implement an emergency alert system similar to an Amber Alert — an emergency message sent to people’s cellphones when a law enforcement agency determines that a child has been abducted and is in imminent danger.
While the House and Senate still need to hash out their differences on several components of SB 3, there is broad support among lawmakers to create an emergency alert system for future power outages. It’s unclear when the alert system would be implemented.
Lawmakers are close to changing the governance of the state’s main grid operator, the Electric Reliability Council of Texas. Senate Bill 2 would require the five experts on the 16-person board of directors for Texas’ main grid operator to be approved by both the Public Utility Commission, which oversees ERCOT, and by a majority of the governor, lieutenant governor and speaker of the House.
Politicians previously have not had such direct involvement in choosing the ERCOT board, whose members are currently selected in a variety of ways; some are chosen by ERCOT’s own nominating committee while others are appointed by companies and consumers participating in the electricity market, with members representing various power sources.
Under the House version of the bill, the governor would appoint the chair of the ERCOT board, who must reside in Texas.
This is a departure from the upper chamber’s version, which would have given the governor the sole authority to appoint the five experts on the ERCOT board — a change energy experts said would do little to improve the power grid.
Lawmakers are also close to increasing the number of seats on the Public Utility Commission under Senate Bill 2154. The two chambers need to hash out their differences in a conference committee, but the latest legislation would increase the number of PUC board members from three to five. The governor would continue to appoint PUC board members, and they would need Senate approval.
All three board members of the PUC resigned after the storm.
Unlike the Senate’s version of Senate Bill 3, the sweeping legislation to reform the power grid, the Texas House proposal would not require renewable energy companies to cover the costs of purchasing reserve power for the grid.
Renewable sources of energy, such as wind and solar, have been under attack by some Texas Republicans since the storm occurred; many incorrectly said clean energy sources were the primary cause of the widespread power outages.
The amended legislation would require state regulators to review whether there is enough reserve power available and if additional reserves from nonrenewable sources are necessary.
Source: Texas Tribune