More Groups Come Out Against PUC’s Electricity Plan, Call for Legislative Reforms as the Issue Goes Down to the Wire in Texas Legislature

Attempts to reform the Texas Public Utility Commission’s (PUC) proposed Performance Credit Mechanism (PCM) are bumping up against legislative deadlines in the final days of the 88th Texas Legislative Session.

Industry groups with concerns about the PCM–including the Texas Oil & Gas Association (TXOGA), along with industry groups such as the Texas Association of Manufacturers (TAM), Texas Chemical Council (TCC) and Texas Industrial Energy Consumers (TIEC)–are sounding the alarm that reforms and accountability are needed by the Texas Legislature before session adjourns on May 29.

“I don’t believe any legislator wants to see a giant electricity tax imposed on their voters. Homeowners and businesses are demanding protections. Consumers want to know what this new scheme is going to cost and no one is being transparent. By adopting meaningful cost caps on a new and untested program, all Texans can have confidence their legislator fought for the best deal possible,” said Todd Staples, president of TXOGA.

“The PCM is a costly, unnecessary tool that will provide billions in profits to the very generators who failed Texans during Winter Storm Uri. This unproven model has the potential to add billions to the market, and without a firm cost cap, it threatens to significantly increase prices on all consumers without meaningfully improving reliability. Any implementation of the PCM must include strong guardrails to ensure reliability and cost efficiency standards for both business and residential customers,” said Tony Bennett, president and CEO of TAM.

TXOGA, TAM, TCC and TIEC recently banded together to form a new coalition called Texas Consumers for Affordable and Reliable Electricity Solutions (Texas CARES), which aims to ensure that Texas’ electricity market redesign prioritizes consumers and protects everyday Texans from costly and untried programs, which they say the PCM is. According to the group, the PCM is “promoted only by those who produce power—not the consumers” and that their Texas CARES coalition “aims to keep unchecked, unelected regulators accountable and support Texas legislators in their efforts to ensure affordable and reliable electricity services for all Texans.”

TXOGA and other industry groups are pushing for the passages of the Committee Substitute for Senate Bill 2012 (CSSB 2012), Senate Bill 7 (SB 7), Senate Bill 2627 (SB 2627) and Senate Joint Resolution 93 (SJR 93), saying these bills will establish “robust guardrails” to protect businesses and citizens from what they are calling a “massive electricity tax” and “blank check” to power generation companies. Specifically, these critics are calling for a price cap for performance credits to generators, a costs and benefits study, assurances credits are paid for actual performance, and penalties for generators who do not perform. They are also calling for transparency in the rulemaking process and a full review and sunset of the program. The SJR is a constitutional amendment that, if passed by voters in an election, would use state dollars to ensure dispatchable electric generation is built to meet the demand when intermittent power sources do not perform.

The idea of a PCM is nothing more than a “blank check” lacking “checks and balances to protect consumers,” Staples has said.

Earlier this year the industry groups commissioned a study of the PCM, with the findings demonstrating that the PCM program would cost taxpayers billions of dollars–with some estimates projecting a cost to Texas consumers of over $5 billion each year–while failing to provide “a meaningful improvement in reliability.”

With less than two weeks left in the 88th Texas Legislative Session, another coalition of organizations not typically aligned on issues before the Texas Legislature issued a release opposing the PCM as-is and calling on the Legislature to pass reforms. From TXOGA to the Sierra Club Lone Star Chapter, and the Texas Energy Buyers Alliance to Texas AARP, these groups are calling for a “firm cap” on the PCM.

“To protect residential customers’ financial interests, AARP Texas believes a proposed Performance Credit Mechanism scheme under consideration in the Texas Legislature must include a firm and reasonable cost cap to limit how much consumers are impacted by any changes in the electricity market,” said Tina Tran, AARP Texas Director.

“They are actively trying to convince the Legislature they need a $9 to $12 billion electricity tax to guarantee the lights stay on. The legislature should reject this greedy electric revenue grab that will hurt large and small consumers and continue to impose cost caps and guardrails on the electricity tax,” said Cyrus Reed, Conservation Director, Sierra Club, Lone Star Chapter.

With deadlines looming, PCM critics are touting the data in an effort to get their preferred reforms over the finish line and to Governor Abbott’s desk for his signature.

“Reliability in our electric grid is essential to meet Texans’ basic needs, but so is controlling extreme costs. Having a firm and meaningful cap on the cost exposure of a Performance Credit Mechanism is of the utmost importance to protect consumers from open-ended electricity costs. Without a meaningful cost cap, generators are given a blank check, and consumers will have imposed on them a giant electricity tax.”

“All consumers should ask their legislator to protect Texas electricity rate payers from a run-away program,” said Staples.