SENATE PANEL CONSIDERS NEW PLAN TO INCENTIVIZE POWER PLANT CONSTRUCTION

(AUSTIN) — The Senate Business and Commerce Committee considered another plan to add more power plants to the state's de-regulated electric grid. The Senate has already approved a bill to incentivize the construction of 10,000 megawatts worth of emergency back-up power plants in the form of SB 6, but that bill has yet to be scheduled for a hearing in the House. With time running out in the session, the committee considered and voted out the proposal Tuesday, with chair and Georgetown Senator Charles Schwertner saying the new plan will incentivize the new construction and an increase in generation capacity that the state still needs to ensure the lights stay on. "This bill is about doing what we need to right now to address the concerns of Texans and getting what we need in a specific amount of time," he said.

After Winter Storm Uri that knocked out power for millions of Texans in February of 2021, stranding them in the dark and cold for days, lawmakers have been looking for a way to ensure the state has a reliable and adequate reserve of electric generation now and in the years to come. Schwertner is among the majority of state lawmakers that don't consider renewable resources like wind and solar power as sources that can be relied on every hour of every day of the year. They say while renewables offer a cheap and abundant source of electricity under good operating conditions, wind turbines and solar panels are subject to the weather, whereas a thermal plant fired by natural gas can come online at the flip of a switch. As renewable generation takes up an increasingly larger share of state generation capacity, Lt. Governor Dan Patrick has said encouraging the construction of more dispatchable power generation - power that is primarily under human control - is among his top priorities for the session.

This latest plan, in the form of SB 2627 and SJR 93, both by Schwertner, would create in-market incentives to entice private industry to build more generation capacity in Texas. Because of their commitment to a deregulated market, lawmakers in both chambers have focused on using market incentives and bonuses to attract private investment in power plants, and are trying to find the least intrusive means to accomplish this. Schwertner's new plan would offer incentives for companies to break ground on new construction and to complete these projects in a timely manner. It would create a new state-backed fund that would offer zero-interest 20-year loans to companies for the purposes of building new dispatchable plants in the state. It would also pay out millions in bonuses for companies that complete construction and connect new power to the state grid by the end of 2026. "These are financial incentives that are powerful incentives that I think speak clearly to the need of Texas and Texans to make sure we have that long-term resource adequacy and dispatchable generation to balance out the ever increasing penetration of interruptibles and renewables on the Texas electric grid," said Schwertner. Like SB 6, the bill would also create a zero-interest loan payment to help with upkeep and maintenance on existing power plants.

The emergency backup generation plan laid out in SB 6 received pushback from some market participants as an out-of-market solution where a few companies would receive help from the state to build plants that, under ideal circumstance, would almost always stand idle. The new plan, says Schwertner, would put those megawatts onto the deregulated market. He noted, however, that there are going to be winners and losers under any new law passed by the state. "They both have pluses and minuses," Schwertner said of the two plans. "There is, again, no perfect solution regarding 'how do we get more dispatchable generation'…you can argue a plus or a minus on every single proposal that's been put forward in this committee regarding electricity and energy." The measures approved by the committee could come before the full Senate as early as Thursday.

The Senate will reconvene Wednesday, May 3, at 11 a.m.

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