Public Utility Commission's recommendation to change electricity market causes controversy at capitol
AUSTIN (CBSDFW.COM) – Some state lawmakers are criticizing a recommended plan by the Public Utility Commission of Texas to make the state's electric grid more reliable as the population continues to grow.
While the PUC isn't implementing the plan until the legislature weighs-in, it's generating controversy at the Capitol.
"I'm deeply concerned."
The PUC favors what's called the Performance Credit Mechanism or PCM.
Experts say the program is designed to provide extra payments to power plant operators who would be available to produce electricity at a moment's notice when the grid needs it.
Those extra payments or performance credits would ultimately be paid for by Texas ratepayers, but no one knows for sure how much more this would cost.
Patterson, who's been an electricity and natural gas broker for large businesses for 17 years said, "This market structure has never been implemented in any electricity market anywhere in the world before. So, in and of itself, that's a big risk. All of those complexities mean that it's going to be more expensive for the end-use customer under this market structure."
State Senator Nathan Johnson, D-Dallas, said Friday that he wants to give the proposal a chance. "I do think it's worth pursuing. There have been models out there around the world for a long time. They all have problems. The PCM, performance credit mechanism, is an attempt to create a mechanism that obtains the advantages of these other systems and addresses some of the disadvantages."
Johnson said though he wants to continue evaluating the proposal, which he said can still be altered.
In a tweet Thursday, State Senator Charles Schwertner, R-Bryan, who authored SB 3, a key bill two years ago designed to stabilize the grid objected to the proposal. "The PUC of Texas chose to ignore the clear direction of the Texas Legislature by voting to replace the state's competitive energy market with a costly and complex proposal.. It's unacceptable."
Patterson said, "Absolutely, I agree with that. It was never the intent of the Texas Legislature for a wholesale change of everything about our market, everything that's made our market as successful as it's been."
A PUC spokeswoman issued a statement late Friday afternoon in response to Schwertner's tweet. "Given the significant interest in the PCM and associated guiding principles, the decision yesterday reflects the Commission's commitment to continue to work with legislators, stakeholders, and the public and allow time for legislative input before beginning the process of implementation."
Governor Greg Abbott, who oversees the PUC, sent the agency a letter last week saying its proposal will help make the grid more reliable. "As the legislature has noted, a reliability standard must be the foundation of any reliability design. The PCM best meets this call."
Patterson said the state needs more nuclear or natural gas fired power plants to provide the electricity needed for the state's growing population.
He and other energy industry experts have said federal subsidies have made wind and solar power cheaper to produce than electricity produced by thermal-powered plants, which have discouraged new plants from being built in Texas.
Johnson said while he can't disagree with that, there are also batteries being produced that can store solar and wind power for emergency use when the sun isn't shining or the wind isn't blowing.
While everyone agrees the state has to figure out how to accommodate all of the new businesses and residents moving into Texas, Johnson said there's no general consensus for a plan to do that.
He said it's critical state and industry leaders are on the same page. "A lot of this depends on the willingness of the investment community, power generation investment community to see Texas as a stable, good investment. We've got to have that. That in turn draws industry here, draws people here. It stabilizes our whole economy."
Schwertner pledged the Senate will hold hearings on this issue in the coming months.