For more than a generation, ERCOT’s competitive electric market has propelled Texas’ energy innovation and leadership — and, at least until recently, generally kept Texans’ electric rates low.

But things are changing rapidly on the grid, and costs are skyrocketing. State leaders are considering abandoning the competitive electric market in favor of state-owned generation and centralized control of the grid. 

That’s unnecessary and counterproductive.

To understand what’s happening and where we’re headed, it helps to know how we got to where we are. To better understand the system we have today and some of the most promising solutions to our current grid problems, you should get to know Sam Insull…

As the clock ticks down on this year’s session, the Texas Legislature is on the threshold of making game-changing decisions to improve — or not to improve — grid reliability in the state. 

The Senate has a very checkered record on energy bills this year — but it also has, to its credit, passed a bipartisan trio of praiseworthy bills focused on energy efficiency (SB 258), demand response (SB 114), and distributed energy resources (or DERs; SB 2112). 

Now, the ball is in the House's court. It has just more than two weeks to pass these critical bills.

The need for the bills has never been clearer. Even in their deeply problematic and misleading press conference last week, ERCOT CEO Pablo Vegas and PUC Chair Peter Lake talked about addressing the grid’s supply and demand challenges. The Independent Market Monitor, meanwhile, points to the lack of operational flexibility as the state’s main challenge. 

Either way, solutions like efficiency, demand response and DERs provide a cost-effective, speedy way to bolster flexibility and improve grid reliability. No matter how you look at it, the demand side must be part of the solution.

I’ll write in coming days about efficiency and demand response. Today, let’s focus on DERs.

Senate Bill 6 would mean the end of electric market competition in Texas.

Last week, a Texas court ruled that the Public Utility Commission of Texas (PUC) set prices too high during Winter Storm Uri in 2021.

The Third Court of Appeals noted that the Texas Legislature enshrined competition as the cornerstone of the electric market. By fixing the price, the court ruled, the PUC overstepped its bounds and arbitrarily raised Texans’ energy bills.

There are a few reasons that energy bills are poised to climb even higher in Texas — it’s not just a bad PUC decision or two (though those have certainly made things worse). It’s also because state government — especially the Texas Senate — is moving rapidly away from the competitive principles that have been at the core of Texas’ electricity system since Dan Patrick was on AM radio…

As I write, about 800,000 Texans are without power. The problems today are very different than those during Uri when there wasn’t enough gas or power to meet the sky high demand in the extreme cold. These outages are on the local distribution grid but that doesn’t mean policymakers, regulators, energy companies, and Texans are powerless to reduce their severity.

During his press conference yesterday, Governor Abbott said: “It’s important to remember that local outages are not a reason to say there is a problem with the power grid.” I know what he probably means and I hear this from people all the time, but it’s wrong. He likely means there aren’t problems at the transmission level, also called the bulk power grid, or the ERCOT grid. But the distribution level grid is still part of the grid. Local outages are still outages.