State Sen. Mayes Middleton (R-Galveston) supports recently announced legislation focused on boosting energy grid reliability across Texas.
On March 9, Lt. Governor Dan Patrick (R-TX) and State Sen. Charles Schwertner (R-Georgetown) released a joint statement announcing their support for Senate Bills 6 and 7. These two pieces of legislation are aimed at ensuring a reliable energy grid across Texas and attracting new sources of reliable thermal electricity generation. Patrick named both bills to his top 10 list of priority legislation this session.
Middleton told Austin Journal that he applauded Patrick and Schwertner's work to address grid stability.
"In a distorted market with intermittent, renewable technologies receiving an unfair advantage through heavy tax subsidies, there is a need to incentivize new, reliable, dispatchable generation that will perform when we need it most, especially when the sun is not shining and the wind is not blowing," Middleton said. "I believe both Senate Bill 6 and Senate Bill 7 take direct aim at leveling the playing field."
Middleton said that he believes that the new legislation will provide a better plan for the grid than performance credit mechanism (PCM) rules.
"I support any legislation that assists in putting new steel in the ground for dispatchable, reliable generation," Middleton said. "As for PCM, I believe that the goal of the mechanism is correct in incentivizing generators to be available during times of peak demand, and only paying them if they perform during those times. After our initial hearings on PCM, I wanted to make sure that certain protections were put in place to enforce penalties on generators who did not perform and assign the cost of the mechanism to those who would benefit from the performance credit. I believe SB 2012 by Sen. Schwertner is a step in the right direction."
According to Middleton, while SB 6 and SB 7 are positive developments, there is still work to do to increase the grid reliability and lower costs for taxpayers.
"There are a comprehensive slate of bills currently proposed that I believe are needed to ensure the reliability of our grid to ensure increases in baseload and dispatchable power when the sun is not shining and the wind is not blowing," Middleton said. "For example, the cost of transmission for renewable generation is extremely high due to its geographic location far from population centers, and a large portion of the cost is placed on taxpayers. These generators should have to pay for the cost of connecting to the grid, and there are a number of bills that aim to accomplish this task."
Recently published research by the Energy Alliance reported that since 2007, wind and solar generators in Texas collected $66 billion in investments. Generators were on the receiving end of over $21 billion in local, state and federal subsidies. In that same time frame, renewables grew their share of the Texas energy market from 3% to 31%. The research project that that figure would grow to 37% by the end of 2023.
The Energy Alliance's research listed a number of recommendations to improve the reliability and price of electricity in Texas, one of which was to combat renewable energy subsidies head-on to fix "price distortions" caused by those tax incentives.
"The federal government has greatly distorted our energy market with tens of billions in taxpayer subsidies for wind and solar power generation that hasn’t worked when we most needed it," Middleton said. "This has disincentivized investment in thermal generation that provides reliable, dispatchable power in times of need. For example, renewable generators are able to sell their energy, even at a loss, and make money due to federal subsidies. I believe SB 6 and 7 go a long way to undo distortions from federal subsidies and provide reliable, dispatchable energy for Texans."
In a testimony before the Texas Senate Committee on Business & Commerce, Brent Bennett, policy director of the Texas Public Policy Foundation's Life: Powered project, pointed out the need for Texas to bring a balance to its energy market due to "overinvestment" in renewable sources of generation.
Bennett advocated for an alteration to the Public Utility Commission's plan by changing where the money comes from in order to pay for the cost of improved reliability. He suggested that the costs be allocated to electricity generators on a "cost causation basis," meaning generators whose unreliable nature, which results in volatile electricity prices, would be responsible for the cost they impose on the market.