SENATE MOVES FIRST ROUND OF ENERGY BILLS

(AUSTIN) — The Senate on Tuesday granted initial approval to a number of bills that are part of the chamber's comprehensive package to improve electric grid reliability in Texas. The Business and Commerce Committee voted to send the two major components of that plan, Senate Bills 6 and 7, to the full body on Monday, and Tuesday the Senate took up and considered a number of related bills. Electricity supply has remained a primary focus of lawmakers since the Valentine's Day winter storm of 2021 knocked out power for millions of Texans for most of a week. Immediate reforms last session were aimed at improving communication and internal operations at state and private energy regulators and requiring winterization of critical energy infrastructure. This session, the Senate has been working to develop market based incentives to drive construction of new generation capacity in Texas, specifically "dispatchable" power from thermal generators like natural gas that can be turned on and off as needed.

Weatherford Senator Phil King offered a number of bills building on last session's reforms of the state electric grid.

The balance between dispatchable and renewable or "intermittent" power in Texas has been a major point of contention, with proponents of solar and wind touting the cost and environmental benefits of those sources. More in the Senate, however, believe that dispatchable power's reliability is one of the most important factors for consideration in the state's energy portfolio. They also argue that government subsidies have unbalanced the state's deregulated energy market and have given an unfair advantage to renewable over dispatchable generation. While building renewable capacity has been a goal since the original deregulation bill passed in 1999, Weatherford Senator Phil King pointed out how the actual development of this capacity in Texas has outpaced state goals fivefold. The original goal was 2000 megawatts of renewable capacity by 2009. "In 2015, we put in place what we thought was a very ambitious goal of 10,000 MW by 2025," said King. "Since then, we have exceeded that goal more than anyone ever imagined." King said that actual development, driven by federal subsidies, has shattered even the most optimistic projections of renewable development in Texas, with more than 50,000 megawatts of capacity on the state grid today. Despite this, he said, the state is still paying subsidies to renewable generators. His bill, SB 2014, would end that mandatory subsidy.

Another bill, SB 2015, also by King, would set new goals for the balance between renewable and dispatchable by requiring that half of all new generation capacity constructed in Texas come from dispatchable sources. A similar requirement was part of the original deregulation bill, which required that half of all new generation built in Texas come from natural gas. Renewable energy, in its infancy at the time, was left out of the calculation. "Renewable energy took off, much because of federal subsidies, at a rate no one ever envisioned," said King. "As a result, that fifty-percent mandate was never able to be enforced." He said his bill is intended to put into effect the intent of the original bill, but instead of requiring natural-gas fired plants, it would mandate that fifty percent of new generation built in Texas come from any dispatchable source, which applies not only to thermal generators, but batteries, geothermal, hydrothermal, and any future technology that is "switch-ready" and can come online in response to demand.

A third bill by King, SB 2013, seeks to drive down utility bills by lessening the burden on consumers of connecting new generators to the state grid. As it stands now, consumers wholly subsidize this cost, which King says encourages companies to site plants where land is cheap, not where it is closest to connect. This has cost consumers billions in fees over the years, said King, pointing out a recent project where a new plant sited just 13 miles from the nearest interconnection cost upwards of $50 million to connect to the grid. His bill would require the Public Utility Commission to set a cap for consumer contribution to the construction of new transmission lines. Any cost above that cap would be borne by the company building the power plant.

The Senate will reconvene Wednesday, April 5, at 11 a.m.

###