During the 88th Texas Legislative Session, several key pieces of legislation were passed to further strengthen the reliability of the state’s electric grid while also putting guardrails in place to ensure Texans are protected from expensive and unproven initiatives.
Following Winter Storm Uri, legislators in Texas were focused on making reforms to help prevent another similar situation. Legislative reform efforts were of particular interest to the energy industry, which is not only a producer of energy and electricity, but also a large user of electricity.
The first key piece of legislation passed by the Legislature was HB 1500, also known as the Public Utility Commission (PUC) sunset bill, which included a mandatory review of PUC’s effectiveness as well as the proposed Performance Credit Mechanism (PCM). Some groups argued the PCM as originally proposed would have been a windfall for power generator companies at the expense of Texas residents and businesses. The cost of the PCM to taxpayers never included a definitive price tag and guaranteed no immediate benefit to electricity consumers in the form of increased electricity reliability, the groups claimed.
Texas Oil & Gas Association (TXOGA) President Todd Staples called the scheme a “giant electricity tax” imposed on Texans, while Tony Bennett, President and CEO of Texas Association of Manufacturers (TAM), called the PCM a “a costly, unnecessary tool that will provide billions in profits to the very generators who failed Texans during Winter Storm Uri.”
Industry groups TXOGA, TAM, and the Texas Chemical Council (TCC) came together to form a new coalition called Texas Consumers for Affordable and Reliable Electricity Solutions (Texas CARES) to ensure that Texas’ electricity market redesign efforts put communities, residents, and small businesses first to “ensure affordable and reliable electricity services for all Texans.” Other groups not typically aligned with this coalition, such as the Environmental Defense Fund, the Sierra Club’s Lone Star Chapter and Texas AARP, also called for a “firm cap” on the PCM.
HB 1500, led by Representative Justin Holland and Senator Charles Schwertner, was eventually amended to include guardrails and a $1 billion cost cap.
Two other bills passed by the Legislature focused on the increased need for transmission, which will improve reliability of the Texas electric grid. HB 5066, sponsored by Representative Charlie Geren and Senator Schwertner, will extend transmission services to underserved areas throughout the state. SB 1076, spearheaded by Senator Phil King and Representative Geren, speeds up the approval times for the building of new transmission facilities.
Finally, two bills, SB 2627 and SJR 93, both championed by Senator Schwertner and Representative Todd Hunter, work in conjunction with each other to address electricity market design. SB 2627 creates the Texas Energy Fund, which will provide completion bonuses and zero-interest loans for new dispatchable generation resources, as well as provide low-interest loans for existing dispatchable generators to access capital needed to maintain and make improvements to existing generation resources. SJR 93 establishes a constitutional amendment which—if approved by Texas voters this fall—will allow for SB 2627 to function.
Collectively these bills–which create protections against runaway costs, expand transmission, and reform Texas’ electricity market–will help create a more reliable electric grid for Texas.
