Texas State Senator Charles Schwertner (R) said that a recent proposal by the Texas Public Utility Commission (PUC) fails to meet legislative directives in a tweet published on December 1.
"TX needs to build new dispatchable energy resources for when the grid is stressed in extreme weather/higher energy use," Schwertner wrote. "Unfortunately, PUC's current market design proposal falls short of this fundamental goal. Let’s work together this session to get it right for Texans."
In a letter sent to the PUC, the Texas Senate Business and Commerce Committee said that the PUC's proposal didn't include any evaluation of the dispatchable ancillary or reliability service product as the Legislature had previously requested. Of the recommendations that the PUC made, the committee said that the organization failed to meet the required directives and could not be employed in a timely or cost-effective manner. The committee requests that the PUC define reliability goals for the Electric Reliability Council of Texas (ERCOT) region, study the impact of a possible market-based service to meet this standard and promote clear performance requirements before moving forward with any significant market redesigns.
In July 2021, Governor Greg Abbott sent a formal letter to the PUC, directing it to take immediate action to improve the reliability of Texas' power grid. Specified actions include the following: streamlining ERCOT market incentives to foster the development and maintenance of adequate and reliable sources of power such as natural gas, coal, and nuclear power; allocating reliability costs to generation resources that cannot guarantee their own availability such as wind or solar power; instructing ERCOT to establish a maintenance schedule for natural gas, coal, nuclear and other non-renewable electricity generators to ensure that an adequate and reliable supply of grid power is available for all Texans; and ordering ERCOT to hasten the development of transmission projects that increase connectivity between existing or new dispatchable generation plants and areas of need.
On November 10, the PUC released a report written by Energy and Environmental Economics (E3) Inc. E3 conducted a quantitative and qualitative review on multiple proposed market redesigns that produced the attached PUC report. The report, in summary, serves as an independent assessment of potential long-term market design reform options to promote the supply of dispatchable generation and focus on reliability as outlined in Phase 2 of the Blueprint published by the PUC in December 2021. Under the PUC, the consulting team of E3, alongside Astrape Consulting, developed and analyzed six specific market designs and considered the impacts of each against a standard Energy-Only market design.
"We're paying a lot of money for uncertainty, I don't think our constituents are going to be real happy about that," State Senator Lois Kolkhorst (R) said during a Texas Senate Business and Commerce Committee hearing on November 17. Kolkhorst said that evidence suggested that the coal and natural gas sectors are shrinking, potentially putting the Texas grid in jeopardy. "It's just going to cost them more. The part that reduced the most is coal and natural gas. Nuclear grew not at all and wind grew some."
"The study is flawed because it's based on assumptions that are not necessarily true," State Senator Donna Campbell (R) said during the same hearing. "I'm not convinced at all that this was a great study. I'm concerned that there may be an effort to put something out there ... just to say you did something. I'm opining here but I wouldn't want that because that's costly and wrong to do."
Dr. Charles Schwertner is a sixth generation Texan and a practicing orthopedic surgeon who was elected to represent Texas' 5th district in 2012. He serves on the Senate Committees on Business and Commerce, Veteran Affairs & Border Security, Agriculture and Transportation, and he also serves as the vice chair of the Senate Committee on Intergovernmental Relations.
