Interest charge

Winter is coming and the state agency in charge of the electric grid may not be ready

Just as temperatures began to drop this month, the state’s Sunset Advisory Commission released a report that questions the Texas Public Utilities Commission’s ability to keep our lights on.

The analysis, which looks a bit like a progress report for the agency, took a close look at the changes made after the 2021 power outage during winter storm Uri. He found, in short, that these changes are not enough to ensure that the PUC is ready to improve network reliability. Nor does it accurately analyze data to inform decisions about state utility contracts.

“The PUC is sorely under-resourced given its critical responsibilities and the work that remains to be done,” the report said. While explaining how the 1999 deregulation worked until it didn’t work, the report pointed out that despite power outages during an “unusually severe” winter storm in 2011, “the electricity policy of the ‘State remained largely unchanged and business continued as usual’.

Then came Uri, which left 11 million Texas homes without power and water for days during one of the coldest winter storms on record. The state legislature gave the PUC a mandate to more actively oversee the Texas Electrical Reliability Board and the market, but the “PUC was ill-prepared for this task,” the report said.

This is partly due to budget cuts. At the time of the legislative mandate, the agency employed 166 people. That total raised concerns with Sunset Commission staff, who said the agency lacks the necessary bodies to adequately oversee the industries it is charged with regulating. For example, the PUC relied heavily on participants in the markets it regulated for the analysis it needed to make recommendations and decisions.

“Market participants have private interests to protect, which may conflict with the broader public interest in providing reliable electricity to all Texans,” the report said. Having an independent analysis, Sunset staff said, would be critical as the agency begins to implement market reforms while addressing network reliability. The PUC should have more funding to hire its own analysts, they said.

The voluminous document also recommended better defining the term “reliability”, as well as ensuring that the PUC and ERCOT actually communicate with each other.

Lawmakers will consider the report during next year’s legislative session, and a public hearing will also be held. But the agency was already put on notice by some lawmakers last week when the state’s Senate Business and Commerce Committee held a hearing to discuss the PUC’s proposed plan to improve reliability by redesigning the utility market. in Texas.

The plan, which was proposed to the committee by PUC Chairman Peter Lake, would pay power generation companies to maintain a reserve of electricity for the grid during periods of high demand, such as this summer, or during a storm like Uri. After forecasting and then proving that they can reliably supply electricity during peak demand, the state would pay companies a “performance credit mechanism”.

Lake testified that the idea would inspire electricity generators to be reliable in a way that supply and demand alone would not.

The cost and schedule worried several of the senators, as did the fact that the consulting firm hired to review potential plans did not participate in the hearing and would not have considered the massive network outage during Uri in his analysis of this plan would really improve reliability, choosing to run his analysis on the weather from 1980 to 2019.

“What we have in front of us is a market-based solution that analysis shows would give us 10 times the reliability for less money than customers would pay in the absence of action,” Lake said.

However, several senators called the plan “convoluted” and questioned whether electricity consumers in the state should pay for an untested idea when they had already received billions from the 2021 storm.

“We need to have power, heat, and air conditioning in the summer, but it needs to come in a package that lets people pay their monthly bills,” said State Sen. Jose Menendez (D-San Antonio).

“We have to be good stewards with the dollars taxpayers pay,” said Sen. Donna Campbell (R-New Braunfels).

The idea, which has not been realized anywhere else in the country, would cost consumers an additional $460 million a year, the PUC told the committee. Full implementation could also take more than four years. In the meantime, if bad weather were to hit this winter, consumers could once again be left behind. Disaster and hazard mapping from the National Oceanic and Atmospheric Administration shows that between 1980 and 2022 there have been nine winter storms and nearly half of the state’s residents are unprepared for another. .

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Bethany Erickson

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Bethany Erickson is the Senior Digital Editor of Magazine D. She has written about real estate, education policy, the stock market, and crime throughout her career, and sometimes all at the same time. She hates lima beans and 5 a.m. and takes SAT practice tests for fun.