AUSTIN — State senators on Thursday filed a slate of bills designed to restrict the construction of renewable energy in Texas and encourage the development of more fossil fuel power plants.
Republican Sens. Charles Schwertner of Georgetown and Phil King of Weatherford are leading the effort with the blessing of Lt. Gov. Dan Patrick, who has made it a top priority in the Senate to pass legislation that would ensure new natural gas-fueled power plants in Texas.
Details remain scant on the proposals including costs to taxpayers. But taken together, they would unleash market forces that have the potential to disrupt billions of dollars in upcoming renewable energy investment in Texas while placing a thumb on the scale on the side of fossil fuel.
Patrick introduced the bills during a media briefing at the Capitol on Thursday, calling the effort a “focus on how we balance fairness and the equity and the competitiveness between renewables and thermal; that there’s an incentive for more thermal power built in this state as quickly as we can build it.”
In Texas, thermal power means natural gas.
Since 2002, Texas has had a laissez faire “energy-only” market designed to prioritize price competition. But Thursday’s bills and the ongoing effort by state regulators to redesign Texas’ electricity market could fundamentally change how electricity is bought, sold and produced in Texas.
At stake is the more than $22 billion Texans pay for their electricity each year and the future costs of keeping the lights on for families and businesses. For the average Texan, these proposals could have a major impact on electric bills as industry insiders vie to usher a market design that favors their interests.
“There’s really no sense of what this will actually cost,” Austin-based energy consultant Doug Lewin said. “There’s nothing in there for consumers as far as I can tell. There’s no acknowledgment that Texans are choosing between food, medicine and bills.”
The effort comes in response to the deadly 2021 winter storm that killed more than 200 Texans, plunged nearly half the state into darkness and exposed major weaknesses in the state’s power grid infrastructure.
While the 2021 blackouts resulted from equipment freezes and a lack of weather hardened equipment across all sectors of Texas’ electricity infrastructure, Republican lawmakers and state regulators have remained focused on the state’s growing profile of renewable energy sources that now make up about 36% of Texas total electricity production and are expected to provide 27% of electricity this spring, according to ERCOT seasonal projections.
The bills include:
- Senate Bill 6 would create a 10,000 megawatt reserve of gas fueled power plants for times of high demand as well as a low interest loan program for the construction of new gas plants.
- SB 7 would put in place a market construct that would steer electricity sources toward natural gas power plants and would force wind and solar power sources to either have dispatchable power on site or buy electricity to place in the market when they are not producing.
- SB 2010 and SB 2011 would address market abuses.
- SB 1286 would incentivize companies to build power plants closer to population centers.
- SB 2014 would eliminate any remaining state incentives for building renewable energy.
- SB 2015 would prevent the development of renewable energy in Texas from outpacing natural gas by placing a cap on the amount of new renewable megawatts based on the amount of natural gas generation in the pipeline.
The bills threaten to derail a two-year effort by Texas’ energy regulators to redesign the state’s electricity market. SB 6 put forward a market construct favored by the oil and gas lobby as well as manufacturing industry groups.
But Patrick and Schwertner said they want to work with the Public Utility Commission, the state’s governor-appointed regulators who have been guiding the market overhaul.
Those regulators approved a market design known as the “performance credit mechanism” in January over the objections of Schwertner and senators in the Senate Business and Commerce Committee Schwertner chairs.
That market design would carve out 25% of Texas’ electricity market — roughly $5.7 billion, according to the PUC — for companies that own natural gas power plants. Those companies would compete for so-called performance credits that retail electricity providers, municipal utilities and rural co-ops would be forced to purchase.
The idea was to create a backup supply of quick-fire power plants that can turn on at a moment’s notice when power reserves dip.
Experts, the Texas Oil and Gas Association and analysts have questioned the costs of PUC’s proposal, which the PUC said would increase consumer bills by about 2%. Lawmakers and consultants have also expressed skepticism of the design’s untested nature, which resembles a capacity market while attempting to preserve free market components.
Despite Schwertner forwarding a market design not favored by the PUC, the commission’s chairman Peter Lake said he looked forward to working with Legislature.
“They made clear today the PCM, which we unanimously adopted earlier this year, is an important part of the solution that will achieve this for the Texas grid,” Lake said in an emailed statement.