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.

The ERCOT energy only market is—to borrow Churchill’s comment about democracy—the worst form of an energy market, except for all the others. Texans expect their leaders to make changes to protect them and their property from future extreme weather events. Unfortunately, too many state leaders have fallen under the spell of capacity market solutions — most peddled by large power generation companies — that would waste billions of consumers’ dollars for little or no reliability benefit.

The Public Utility Commission of Texas (PUCT) has already endorsed a version of a capacity market, albeit a wholly untried and unproven one with an eye-glazing name: Performance Credit Mechanism, or PCM. It sounds meritocratic, but it isn’t: the PCM’s distinguishing characteristic is that it would pay generators if they are available at certain times, not necessarily if they actually perform when needed.