The End of Texas’ Legislative Session Leaves Many Electricity Questions Unanswered
Now that the Texas legislature has adjourned sine die, it’s appropriate to take stock of what has and hasn’t been accomplished. The 86th legislature made much-needed progress in some areas, such as flood insurance and occupational licensing. When it comes to electricity, however, the state has been left with many unanswered questions.
Texas has a strong, robust electric grid that provides reliable and affordable power to millions of citizens and businesses. But that’s not to say that the grid doesn’t face challenges. For example, advances in batteries and other storage technologies raise questions about how to integrate these technologies into the electricity market. The state’s Public Utility Commission has an open project on this question, but put it on hold to seek guidance from the legislature. It looked like that guidance would be forthcoming in the form of SB 1941, filed by Senator Kelly Hancock, which would allow electric utilities to purchase power from storage facilities. Unfortunately, while SB 1941 passed the senate and made it out of committee in the House, time ran out before the bill could make it to the House floor.
A second issue facing the Texas grid has to do with its electric “reserve margin.” Due to the current absence of widespread storage on the grid, Texas must have enough electric capacity on hand to meet electric demand during the hot days of summer. And given that not all plants can operate fully at all times, an excess “reserve margin” of capacity is preferred. Economic analysis suggests that a reserve margin of around 10 percent is most efficient. Recently, however, Texas’ reserve margin has dipped below that level, creating much consternation about the cause of and possible solutions to the problem.
Some have blamed subsidies for renewable energy. SB 2232, also by Senator Hancock, would have mandated that the PUC study the effect of renewable subsidies on the reserve margin and overall grid reliability. The legislation was criticized for singling out one possible cause—renewable subsidies—while ignoring other factors. In fact, increased deployment of renewables could help alleviate Texas’ reserve margin problems over the long term. In any event, SB 2232 also died in the House.
The lack of legislative action on these issues won’t make them go away; it just means that the venue for discussion will move to the PUC and ERCOT, as well as the market. It also means, though, that any action taken on these issues will occur without the formal input of the legislature.
