Texas Consumers Hang in the Balance

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.