(Texas Scorecard) – Miriah Sachs and her family of four moved to Cypress, Texas from Nebraska in 2020.
Months later they endured something they didn’t expect: the February 2021 winter blackout. They, like millions of other Texans, found themselves without power. For the Sachs, it was nine days. Miriah Sachs has worried about whether or not this will happen again.
It did, but this time, it wasn’t winter. Hurricane Beryl rammed into southeast Texas on July 8, 2024. Again, the Sachs lost power. Thankfully, it was only for 67 hours; they stayed at a hotel.
This event brought energy generation and transmission back to the forefront of Miriah Sachs’ mind, along with millions of other Texans impacted by the storm or watching from a distance.
Outages aside, one problem in particular continues to grow. Sachs wrote to Texas Scorecard that their electricity bills are now “much much higher and DOUBLED between May and July bills this year.”
Others have had their electric bills bite into their bank accounts. In May 2024, Houston Public Media reported data from the federal government that showed a 16 percent jump in electric bills in Houston. Statewide, the Federal Reserve Bank of Dallas reported Texans paid double for electricity in 2022 than before the Chinese coronavirus. On July 17, Bill Peacock, policy director of The Energy Alliance, found that April electricity residential prices were up 23 percent over the past three years.
Are these rising prices sustainable for Sachs and her family? “No,” she replied. “Not in conjunction with the increases across the board—water, insurance, food, rent.”
Causes
Multiple factors fueled increases in Texans’ electric bills.
One is congestion costs. Peacock explained how. “You always have congestion costs in a market because you got demand for electricity. Everybody’s trying to supply that demand by sending electricity through a transmission line,” he said. “But sometimes there’s too much electricity trying to get through one transmission line, and so it kind of gets backed up, and you have to add cost to the system. Then consumers have to pay that cost.”
What’s the biggest culprit behind these congestion costs? Peacock said it’s unreliable wind energy. “When the wind starts blowing, they start generating more and it overcrowds each transmission line,” he said.
Then the solution should be as easy as building more transmission lines, right? Not so fast, Peacock pointed out. “The problem with just building a new transmission to deal with renewable energy congestion costs is that it costs a lot of money to build new transmission,” he said. “You may get yourself in a situation that you’re spending more money on new transmission, then you are saving money when you reduce congestion costs.” Peacock said those pushing unreliable energy don’t care about this or how it affects energy customers. “They just care about building more renewable energy so that they can make more money.”
Are congestion costs the only factor? Not at all. In fact, as Peacock pointed out, if you follow the lines, they lead you back to the money-munching beast swallowing electricity customers’ wallets.
Peacock’s research found this beast was created by public servants in government.
Mandated Price Hikes
On July 17, Master Resource published Peacock’s report on rising electricity costs. His research found that the total Government Imposed Cost of electricity in the Electric Reliability Council of Texas (ERCOT) grid for the past decade was more than $84 billion. The ERCOT grid is the state’s self-governing power grid that is not connected to the national one. That cost was the federal, state, and local governments combined. Peacock’s analysis found that the federal government wasn’t the biggest offender. “Texas state and local governments are responsible for 85.7% of the total,” he wrote. In 2023 alone, Peacock found that all governments combined hiked electricity costs by close to $20 billion. That equaled more than 42 percent of the total cost of electricity for Texans served by the ERCOT grid.
This happened because Texas’ public servants supported subsidies for unreliable energy sources: wind and solar.
The ERCOT grid wasn’t always this way. Peacock wrote that in the past the grid was once affordable and reliable. But as state government control increased, reliability sunk and costs soared.
The “pivot point,” as Peacock put it, happened in 2019. From 2014-2018, government-imposed costs (GIC) were $14.7 billion—an average of $3 billion year after year. Then, GIC jumped from $4.3 billion (2018) to almost $9 billion (2019). “That was mainly because of a major change the PUC made to the ORDC, the operating reserve demand curve, which is an administrative mechanism the PUC uses to manipulate prices when they disagree with market outcomes,” Peacock explained. “Since last year, the ORDC has taken a back seat to the new ECRS, the ERCOT Contingency Reserve Service. It increased the cost of electricity by $12 billion last year.” He stressed these are all wholesale prices. Retail prices do not rise as quickly due to existing contracts. However, in time, retail prices will reflect wholesale prices. For now, there is some hope. “The PUC made some changes to the ECRS which will reduce its impact this year, as will the cooler summer,” Peacock added. “I estimate the ECRS will cost as about $3 billion to the wholesale cost this year.”
Back to the timeline of events, the 2021 February winter storm arrived. Over the past five years, GIC equaled almost $70 billion, or more than 32 percent of the total cost of electricity, with Texans absorbing most of the cost hit. “In the five years prior to 2019, wholesale prices averaged $31.18 per megawatt hour,” Peacock wrote. “Since then, prices [have] averaged $76.14. The costs translate into higher energy prices, higher general prices, higher taxes, lower wages, and lower profits for Texans. Except for wages and profits in the energy industry.”
Peacock also found that subsidies for unreliable energy have contributed to destabilizing Texas’ energy. “In 2014, natural gas, coal, and nuclear (thermal generation) made up 86% of the generation capacity in ERCOT. Wind was 13% of capacity, solar less than 0.5%. In 2024, thermal generation comprises only 58% of generating capacity. Renewables now make up 38%: wind 25% and solar 13%,” he wrote. “It is incredibly complex, difficult, and expensive to maintain the reliability of the Texas electric grid when almost 40% of the installed capacity is intermittent, i.e., cannot be counted on to be available when needed. Battery storage, now at 4% of grid capacity, will never be able to compensate for this.”
What then is the solution? Simple. “Eliminate all of the subsidies,” Peacock wrote. “The Texas Legislature and the PUC could end all state energy subsidies by 2026.” In an interview, Peacock said that subsidies for unreliable energy for this year are going to be about $900 million.”That’s largely going to be the credit lines, and Chapter 313, and some Chapter 312.”
But what about subsidies from the federal government? Peacock offered two solutions there. “If you’re taking renewable subsidies from the federal government, you have to have a surcharge on whatever price you bid, and you’re gonna have to pay X amount more,” he said. “Or you can’t offer below this amount. Something like that. Because as long as they get to keep selling at their bargain basement prices, the traditional generators in Texas are never going to be able to catch up.”
Jason Isaac of Life:Powered, Texas Public Policy Foundation’s energy project, agreed that unreliable energy generators need to pay up. As of right now, Texas is on the path to become like California. “Our grid is already going that direction right now, unless the legislature during the next legislative session acts to require reliability for variable sources of generation and puts the cost on those sources of generation, not on ratepayers,” he said.
Peacock agreed state lawmakers must act. “What we need is a legislature that has the willingness to implement these things,” he said. “They haven’t been willing to take on the green energy lobby, for whatever reason.”
For Miriah Sachs, she wants action and she wants it now on Texas’ terms. “I also don’t want to be connected to the [national] grid for other reasons,” she said. “I think Texas should fix our problems and still stay independent.”
Part four of this series will examine foreign threats to the state’s power grid.