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Power grid bills advance in Texas House - The Dallas Morning News

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AUSTIN – It’s big business versus bigger business in a fight over power grid legislation in Austin that advanced Thursday, which could have major impacts on residential electric bills.

Depending on which power grid proposals are ultimately approved, some Texas residents could pay between 2% to 75% more in monthly electricity costs, according to experts, regulators and industry groups. And several of the state’s largest electricity producers said they will cancel new planned power plant projects that would cost billions of dollars if they don’t get their way.

All of the power grid talk, which seeks to redesign the power market and favors natural gas generation, stems from the state’s devastating 2021 winter storm. That year, equipment failures led to the near collapse of the power grid and forced ERCOT to shut off power to millions. The resulting blackouts killed hundreds of Texans.

In the aftermath, the state’s potential to keep up with electricity demand has been called into question, and yet numerous projects that would add enough electricity to power millions of homes are planned for the ERCOT market.

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Questions still remain about whether a power market redesign is necessary.

Despite those questions, a Texas House committee voted Thursday to send Senate proposals to the House floor even as lawmakers admitted the proposals have flaws. They include a taxpayer-funded $10 billion low-interest loan program for power generators and an energy market bill that is pitting Texas’ largest electricity producers against corporate giants such as ExxonMobil and North Texas manufacturers.

State lawmakers, lobbyists and legislative staff – more than 70 people – crammed into a board room at the Capitol Thursday for a hearing that wasn’t live streamed or taped to discuss the multi-billion proposals. On Wednesday, some lawmakers on the committee complained of little notice on the legislation that only arrived in their inboxes minutes before a previous hearing on one of the proposals.

Rep. Todd Hunter, R-Corpus Christi, chairs the committee that considered the bills. He said the bills the 13 members passed unanimously remained “works in progress.” The House has until Tuesday to vote on initial approval of the proposed laws.

“This is a very important issue and we should continue daily to converse, working together to see if we can improve everything,” Hunter said, addressing the committee.

One of the bills passed out of the committee – Senate Bill 7 – would place a $1 billion cap on price increases to Texas’ estimated $22.3 billion consumer electricity market resulting in new market incentives designed to increase resiliency to the state’s power. The so-called performance credit mechanism adopted by state electric grid regulators in January aims to encourage the construction of new natural gas power plants.

It would do this by carving out roughly 1/4th of the entire ERCOT electricity market solely for natural gas plants and reward them with a premium for committing to generating electricity when power reserves are low. All additional costs would be passed down to consumers.

The other bill, SB 2627, would create a $10 billion taxpayer funded low-interest loan program for power generators to build new power plants. That proposal could require an election if it passes the House.

Rep. Rafael Anchía, D-Dallas, told an Austin KUT radio reporter Wednesday the proposal would take $10 billion of taxpayer money and “light it on fire.”

At Thursday’s hearing, Anchía said the loan program would expose the state to “pretty sizable” financial risk of borrowers defaulting.

“I’m not sure that’s the business we should be in as a state government,” he said. “There is a private market that can do this.”

Texas’ top three power producers, including Irving-based Vistra Corp., have said they would not take advantage of the loan program.

The bill would offer a 2% loan requiring a 3% down payment. According to the bill, the state would get reimbursed first, and the state would not require payments on principal for about seven years. It also includes a bonus program for early completion that could defray roughly 5% to 10% of construction costs.

Lawmakers have mostly this year focused on punishing renewable energy, even though it faced no more culpability for the power outages in the storm than coveted natural gas power plants, state and federal studies have shown.

But wind and solar have a fundamental lack of dependability. Its reliance on the weather has driven the effort to prop up natural gas power, which can be turned on at the flip of a switch.

The University of Texas at Austin’s Michael Webber said the legislature’s emphasis on building natural gas power plants ignores other ways to increase the grid’s resilience via power lines projects, curbing demand, other sources of dispatchable energy and the problems that plagued natural gas lines during the 2021 freeze.

“The problem with the status quo isn’t the market, it was the lack of winterization of the gas infrastructure,” said Webber, Josey Centennial Professor in Energy Resources at UT. “I feel like we are all focused on the wrong thing.”

Initial estimates show the new market design costing $460 million a year – a 2% increase to consumer electric bills. But a consortium of major industrial companies led by coastal refineries, manufacturers and West Texas oil interests have argued that without guardrails, Texas residents would see their bills increase by 75%.

Texas Oil and Gas Association President Todd Staples called an unrestricted PCM market a “blank check” in a news release. Groups such as his and major companies such as BASF, Dow Chemical, Lockheed Martin, Raytheon and Texas Instruments have been leading the lobby effort for the $1 billion cap and sent a letter to Speaker Dade Phelan this week.

Those companies would see major cost increases if the energy hikes predicted come to fruition.

On the other side of the debate are Texas’ largest energy producers, Vistra, NRG and Calpine. They have said they will cancel billions of dollars in new power plants if the $1 billion cap is adopted.

Those projects would produce enough electricity to power nearly a million homes, according to the lobby group Texas Competitive Power Advocates.

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