Gov. Greg Abbott supports proposal to overhaul Texas power grid

AUSTIN — Gov. Greg Abbott on Tuesday signaled his support for a controversial proposal to overhaul how electricity is bought and sold in Texas that aims to address grid weaknesses exposed in the deadly 2021 winter storm.

In a letter to the Public Utility Commission — the board of Abbott appointees that regulates Texas’ power grid — Abbott said he supports a grid redesign that improves the system’s reliability by encouraging the construction of natural gas power plants.

Staff and the chairman of power grid regulatory agency have recommended a “performance credit mechanism” that would require both public and private power utilities to purchase credits the state would dole out to power generating companies that deliver electricity when power reserves are thinnest.

Abbott’s support could move the arrow on the proposal as the Public Utility Commission is set to possibly approve a market redesign Thursday. The proposal has faced significant pushback from grid experts, ERCOT’s independent market monitor and several state senators since it was introduced in November.

Redesigning Texas’ power grid will have an impact on Texans’ power bills. PUC officials estimate the overhaul would cost ratepayers roughly $460 million a year, an overall increase of 2%, according to a recent market analysis.

In his letter, Abbott said the PUC should give the performance credit mechanism “strong consideration.” Abbott said generators have already vowed to build new power plants if the plan is approved, likely pointing to testimony from the head of the power plant trade group Texas Competitive Power Advocates.

During a House State Affairs Committee meeting Dec. 5, the organization’s director, Michele Richmond, said generators would commit to building 4,500 megawatts — enough electricity to power roughly 900,000 homes — if the proposal is adopted.

“The PCM, if adopted by the PUC and supported by the Legislature, will provide that policy certainty” for investors to build more dispatchable power plants, Richmond said in a statement following the hearing. Dispatchable power in Texas overwhelmingly refers to power plants that are fueled by natural gas.

Statewide political leaders such as Abbott and Lt. Gov. Dan Patrick have placed a premium on creating government policy that will encourage new natural gas power plants.

The idea comes as the lion’s share of conservative state lawmakers continue to blame Texas’ grid woes on the proliferation of wind and solar power in Texas despite state and federal reports that indicated natural gas power plants also failed during the 2021 winter blackouts that killed more than 200 Texans.

Renewable power has become cheaper to produce and green energy producers often can sell electricity far cheaper than fossil fuel powered plants, leading to a glut of investment while solar power, wind energy and large scale battery storage facilities have ascended. But the energy source is intermittent because of its dependence on weather conditions.

But even if the Public Utility Commission does Abbott’s bidding, state lawmakers are expected to take a second look at any proposal they forward. Despite this, Abbott said “time is of the essence.”

“Texas is adding new residents and businesses every year, and the demands on the power grid will continue to grow,” he said. “I have full confidence that you will be able to meet this new demand by adopting and implementing a new market design that prioritizes reliability and meets the directives passed during the last legislative session.”