Opinion: PUC Offering Texans Energy Experiment


Power lines | Image by yelantsevv

For the second February in recent memory, a chilling winter storm rolled through our state. In North Texas – my home – some businesses closed and roads were messy, but the lights stayed on as they did throughout much of the state.

But in Austin, a brief ice storm knocked down enough trees and powerlines to leave 350,000 residents without power.

Yet again, it is evident that Texans have a power grid unable to withstand extreme weather conditions. A report by UT Energy Institute made this assessment following Winter Storm Uri in 2021 and we can see it’s still an issue today. We were fortunate that only one city experienced widespread outages this year. Exactly two years after the events of Uri, this is still a concern, and the proposed solutions aren’t what our state needs.

Currently, the Texas state legislature is considering a recently approved grid redesign by the Public Utilities Commission (PUC). Known as the Performance Credit Mechanism (PCM), this remodel will move Texas away from its current competitive market to an untested, complicated system that mirrors a California capacity market. The focus of this reform is to bolster power generation by encouraging more production, how it goes about doing this is a bit of a mess.

Many, including industry officials and the PUC itself, do not fully understand how PCM would work. This is a new, experimental system with Texans as the unwilling participants. The report that produced this model didn’t even take extreme weather conditions into account. So what exactly do PCM and its advocates hope for it to do?

The PCM is a system intended to function by providing credits to power generators for showing enough capacity ahead of a time of high demand. The PUC would then force utility companies to buy these credits ahead of time to ensure enough power is purchased to account for said high demand. The PCM would not guarantee that this power will be available, but it would more than guarantee a rise in our utility bills if implemented. This is at a time when 45% of DFW residents are cutting down on the purchase of basic necessities in order to pay for their utility bills.

In simpler terms, the PCM would allow a windfall of profits to specific power generators without the accountability in place for the delivery of that power when it’s needed. It doesn’t focus on winterization, energy conservation, or further upgrades to our power grid, but purely on market reform.

As a resident of Texas, an environmentalist, and free-market advocate, I am concerned to say the least. Extreme weather conditions will continue to be a factor for our state moving forward as the effects of climate change are more visible. Addressing the issues with our power grid is critical for both economic and environmental reasons.

On the economic front, the PCM is a net negative with its heavy price tag of $22.9 billion before 2030. On the environmental front, we are looking at a remodel that is an attack on our renewables sector. The aforementioned credit system so vital to PCM is something only available to dispatchable energy sources like natural gas, coal, and nuclear energy. In implementing this redesign our state would be favoring one form of energy over the other when we should be taking an all-of-the-above approach. Current renewable projects alone are estimated to provide 7.2 – 8.8 billion in lifetime tax revenue on a local and state level. There’s no reason we shouldn’t be encouraging the further development of renewables on our grid.

Put simply, the PCM is not the answer. It is the antithesis of what our state needs to address the grid issues and have a better environmental record. Our state legislature, which meets once every two years, is considering the PCM, an open experiment with a lot of problems. They need to reject it outright and consider solutions that will fix the issue at the heart of the problem.

Zack Abnet is the Texas State Director at the American Conservation Coalition (ACC). He’s based in Dallas.

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12 days ago

This was very informative. Thanks for writing this. I wasn’t aware.
I agree with your sentiment of “we should be taking an all-of-the-above approach”.

Buying and selling credits sounds just like an ESG nightmare, much like Europe.