Late Sunday — after the Texas Legislature, at the 11th hour, passed monumental electricity grid bills that stitched together a range of energy proposals that many had assumed to be dead — a friend asked on Twitter, “Does this mean the grid is fixed?” 

No. Not even close.

Over the past 20 weeks, state leaders have, with frightening consistency, focused on the wrong energy-related issues. They wasted time and energy attacking Texas’ nation-leading clean energy sector — something most states and countries pine for — while ignoring consumer-centric solutions that would reduce bills and increase reliability.

The only good news as the 88th legislative session came to a close was the surprising lack of bad news. 

Bad bills that died (or got better)

A remarkable coalition of environmentalists, industry organizations and business groups — including more than 50 chambers of commerce, manufacturers, generators, oil & gas advocates, and others — stopped very real efforts to shut down the renewable energy industry in Texas. 

As attack after attack rolled out of the Texas Senate, the state House of Representatives consistently raised red flags about the effects of such legislation on consumers. House State Affairs Committee Chairman Todd Hunter — a pro-business, anti-nonsense Republican from Corpus Christi — often led the questioning on behalf of consumers. And most anti-renewable bills could not stand up to that scrutiny…

Throughout the legislative session, Chairman Todd Hunter has spoken up — and acted — on behalf of consumers. “I want to protect the consumer,”  he said on the House floor while successfully defending a cap on the cost of electricity capacity in the ERCOT market.

After a series of dangerous Senate votes, Hunter and other House members have one more opportunity to protect Texas consumers in the final days of the legislative session.  

For consumers, it feels like a last stand.

Over a whirlwind and confusing 45 minutes Wednesday evening, senators tacked 15 amendments onto House Bill 1500, a significant but somewhat routine bill designed to improve the efficiency and effectiveness of the Public Utility Commission and ERCOT. Senators sometimes seemed to be voting blind — in some cases, no printed amendments were distributed and Senators didn’t seem to know exactly what they were voting on…

By this time next week, the 88th Texas Regular Legislative Session will be over.

Make no mistake: none of the grid bills under consideration today and throughout the week do much to improve grid reliability. The most impactful bills — including proposals to increase energy efficiency and create opportunities for consumers to get paid to reduce demand at times of scarcity — are all but dead.

The bills that are likely to pass are primarily about redesigning the ERCOT market to pay incumbent generators more money (SB 7 and SB 2012) or giving subsidies to new gas plants (SB 2627 and SJR 93). The February 2021 blackouts, which supposedly prompted this legislation, were due to lack of winterization of gas supply, power plants, and homes and buildings. ERCOT had plenty of capacity, but half of it didn’t work in the extreme cold, ice, and snow.

So these bills do not address the root causes of those outages. Instead, the biggest debates today will likely be over whether to raise consumer costs by only a few billion dollars, or by tens of billions of dollars.

As the Texas Legislature enters the final sprint, big power generators are putting pressure on policymakers to approve a massive increase in their revenues — with as few consumer protections as possible. Some legislators seem compelled to go along for the ride.

The cap the generators want is effectively no cap at all: $9 billion per year. If they get their way, the Governor can take his Site Selection Magazine Governor’s Cup, put it on a bus, and send it straight to, say, Florida. 

Manufacturers and large employers have warned state leaders that this massive giveaway to generators will dramatically hurt their bottom lines. Residential and small commercial consumers can expect 30-40% bill increases if a cost cap doesn’t make it into law. The number of Texans who see their power shut-off — because they’ll no longer be able to afford their electric bills — would skyrocket…

Today, the American Council for an Energy Efficient Economy released an astounding report showing that Texas could slash electricity demand by more than 16,000 megawatts in winter through the widespread use of efficient heat pumps, smart thermostats, and demand response programs aimed at electric vehicles.

That’s more than 80% of the missing megawatts during Uri; ERCOT demand was about 20,000 megawatts more than available supply.

It’s also about 20% of the peak demand that the PUC and ERCOT leaders fretted over last week and 50% more capacity than the infamous Berkshire Hathaway spending binge would create.

The cost savings are about as dramatic. The Berkshire Hathaway plan is now projected to cost $18 billion; to reduce the same amount of power, if utilities and policymakers focused on three highly cost effective offerings (heat pumps, thermostats, and EV demand response), runs about $100 million per year .

Another comparison: the Lieutenant Governor’s newest proposal for zero-interest loans and “completion bonuses” for gas plants is estimated to cost Texans about $1 billion for every gigawatt of electricity that’s added to the grid. The ACEEE study shows that Texas could cut a gigawatt of demand for about $42 million or less than1/20th of that cost — 95% less…

Last winter, heading into the 88th Texas Legislative Session, there was one marquee bad idea to reshape the state’s electricity market.

The Performance Credit Mechanism, or PCM, was dreamed up by a mix of energy companies, Public Utility Commission Chairman Peter Lake, and a consultant that worked for both. It proposed steering billions of Texans’ dollars to thermal generators — in many cases simply to do what they already were doing. It would have dramatically increased power bills with no promise of additional reliability.

Legislators, especially in the Senate, made it clear they hated the idea. The PUC recommended it anyway, just days before the legislative session convened — essentially daring the legislature to create a different system.

In the months since, bad ideas have multiplied like rats. The state Senate has passed at least six bills that would raise consumer costs to previously unimaginable levels. Fortunately, many don’t seem to have gained traction in the House of Representatives, which has taken a far more consumer-centric approach to Texas’ energy challenges.

Make no mistake — those ideas are far from dead. There is more than enough time for Lt. Gov. Dan Patrick to, say, resurrect his proposal for the state to spend $18 billion on gas plants and, in the process, blow up the state’s competitive energy market. We’ll all keep a close eye on those zombie bills over the next month.

But today, let’s focus on the PCM (aka Pretty much a Capacity Market). Because, unlike the Senate’s bad ideas (which you can read more about in this great piece from Lynne Kiesling over at the Knowledge Problem), this one actually seems to have support in the House and from the Governor right now. The next four weeks will determine whether it’s catastrophically terrible, or merely not great, for Texas consumers…

With only six weeks left in the 88th Regular Session, the pressure is mounting. As the countdown to Sine Die (the final day) ticks away, I'll keep you in the loop with regular updates here on Substack and on Twitter.

Here's a sneak peek at what's happening this week.

A Senate Market Design Bill Heads to the House

After the House adjourns on Wednesday, the House State Affairs Committee will dive into one of the Senate's market design bills, SB 2012. The bill aims to control the costs of the Performance Credit Mechanism (PCM); the PCM is a favorite among ERCOT generators but not many others. The bill caps the cost of performance credits at $500 million and mandates real-time co-optimization (RTC) implementation (likely by 2026) before PCM takes effect.

However, the Senate's version includes provisions that would burden renewable energy with the costs of ancillary services and performance credits, ultimately raising consumer costs. It also prevents demand response and storage from earning performance credits, making PCM more expensive and increasing reliability risks, since the state already relies heavily on natural gas. To increase reliability, policymakers need to deal with “correlated risk;” diversifying dispatchable resources to include storage and demand side resources would help. SB 2012 cuts them out.

Thanks to great reporting last week by Mose Buchele of KUT and Naureen Malik and Mitchell Ferman of Bloomberg, Texans finally know that, according to the LCRA’s own estimates, this gas plant building spree will cost almost double what Lt. Gov. Dan Patrick and many senators said it would.

When the Texas House State Affairs Committee heard market reform bills for the first time last week, Chairman Todd Hunter implored witnesses to focus on the Texans who too often have been lost in the conversations about Texas’ energy future: “Now the one name I never hear is the word consumer or public or the taxpayer or the ratepayer. … Look at the impact on the public, the consumer, the ratepayer and the taxpayer.”

Good.

Because Texas consumers and ratepayers will certainly be missing from this week’s energy conversation on the other side of the Capitol. The Senate is poised to approve bills this week that could send electricity costs skyrocketing — no one knows by how much. And Senators, it seems, couldn’t care less…

Four years ago, Texas legislators asked the Texas Department of Motor Vehicles (DMV) to study and recommend a fair electric vehicles (EV) tax that would hit EV drivers no harder than the gas tax hits drivers of conventional cars and trucks.

About 29% of the money that pays for road building and repairs in Texas comes from the gas tax — which, of course, EV owners don't pay.

The DMV put forward a study suggesting roughly $100 would more than cover EV owners’ fair share of the state’s road responsibilities: “If the objective is to replace the average amount of state motor fuel tax that an equivalent conventional vehicle pays, the amount is estimated to be about $100 a year for an electric vehicle” (p. 6).

The legislature, in turn, ignored the study it commissioned. The Senate passed a $200 EV tax instead, which died in the House in the waning days of the last session. So legislators are back at it — the Senate passed the $200 tax again just this week. An identical bill (HB 2199) will be heard in the House Committee on Transportation on Wednesday.

To be clear, drivers of trucks that get ~20 miles per gallon (mpg) end up paying about $108 per year in state gas taxes, according to Texas Transportation Institute (TTI). Sedans pay, according to the DMV, $63.27 a year.

Texas leaders apparently think EV drivers — regardless of what model they drive — should be taxed at twice the highest rate in Texas and should pay more than three times the tax paid by drivers of conventional cars…