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Texas grid regulators approve initial overhaul of state's energy market

The Public Utility Commission on Thursday agreed to increase what power generators can make for electricity before extreme energy scarcity takes hold.
Gabriel C. Pérez
/
KUT
The Public Utility Commission on Thursday agreed to increase what power generators can make for electricity before extreme energy scarcity takes hold.

But energy experts warned Texas consumers could still end up with higher bills without improved electric reliability.

Lee esta historia en español.

The Public Utility Commission of Texas on Thursday approved changes to the way electricity is bought and sold on the state’s power grid. The aim is to increase electric reliability by paying power generators to make more energy available and creating new financial mechanisms to balance supply and demand on the grid.

The vote was taken amid a wave of outcry from activists and objections from some energy experts who say the overhaul may be a costly mistake.

In Texas' competitive energy market, power generators are typically paid only for energy they sell on the grid. The price of that power is dictated by supply and demand.

Among other things, the market changes approved Thursday would increase what power generators can make for electricity before extreme energy scarcity takes hold, and bolster programs that pay industrial consumers to stop using electricity as supply tightens on the grid. Collectively, the slew of changes approved is known as “phase 1” of the PUC’s planned market overhaul.

“The bottom line is to provide economic rewards in our market structure for the desired output,” PUC Chair Peter Lake said ahead of the vote Thursday. “Moving revenues to reliable sources of power.”

"All we really know is that there’s a great big bag full of market changes and it’s wriggling. But we don’t know if that bag contains a pig, or rattlesnakes or kittens.”
Alison Silverstein, energy consultant

A group of energy experts urged the commission to “tap the breaks” before approving the overhaul. They said the underlying logic behind the changes had not been made public and warned that Texas consumers could end up with higher bills without improved electric reliability.

“They just bought a pig in a poke,” energy consultant Alison Silverstein, a former official at both the PUC and Federal Energy Regulatory Commission, said after the meeting. “But all we really know is that there’s a great big bag full of market changes and it’s wriggling. But we don’t know if that bag contains a pig, or rattlesnakes or kittens.”

After approving phase 1, the commission pushed back a final decision on phase 2 of its market overhaul.

“I’m not sitting here and saying that I support [phase 2] 100%, because I don’t know,” Commissioner Jimmy Glotfelty said. “To me the vast majority of that is dependent upon an analytical model-based analysis.”

Phase 2 changes would take more time to implement, Lake said. The commission requested further analysis from grid operators at the Electric Reliability Council of Texas, the state’s grid operator, before approving it.

After the meeting, Tim Morstad, associate state director for AARP Texas, said he was glad the PUC was seeking more input on some of its proposals, but that electricity consumers remained shut out of the process.

“Doing some diligence, more analysis, that's fine. But I don't see a public voice opportunity there,” he said. “That's why we want to have these assurances that whatever is brought back to the U.S., that it's articulated and laid out clearly for the public and there's an opportunity for folks to weigh in.”

The PUC meeting was unusually well-attended by dozens of speakers, many encouraged to come by the Lone Star Sierra Club. Ahead of the discussion on market redesign, they shared their stories of living through February’s blackout and urged the commission to focus on creating better energy efficiency standards to reduce strain on the grid without increasing energy costs.

“In the next storm, the wealthy will be ready with generators while the rest of us will literally be left out in the cold,” said Daniela Silva, who volunteers with Community Resilience Trust, a group that helped homeless people find shelter during the freeze.

Copyright 2021 KUT 90.5. To see more, visit KUT 90.5.