The CONE of Uncertainty

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.