Bill Peacock, the policy director of the Energy Alliance, joined a recent episode of the "Pratt on Texas" podcast to discuss the current state of the Texas energy grid. Peacock covered the history of Texas' market-based grid system and how its erosion via regulation and subsidies has resulted in higher prices for consumers and a lower level of reliability. Peacock called for lawmakers to put a stop to subsidies and return to a pure market system in order to fix the issues facing the grid today.
"[The Senate Plan] is called 'The Energy Insurance Plan,' and the only thing it's going to ensure for sure is higher electricity prices and more profits for generators," Peacock said on the podcast.
On March 9, Texas Lt. Gov. Dan Patrick and Sen. Charles Schwertner 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.
Large amounts of subsidies, tax credits and other financial incentives given to renewable energy projects have been the subject of discussion as of late in the Texas Senate. The Committee on Business and Commerce has held multiple hearings on a plan to redesign the state's grid called the Performance Credit Mechanism, or PCM. Several senators questioned whether these tax breaks have created an un-level playing field in the energy market and whether the state should take action to even things out.
On the "Pratt on Texas" podcast, Peacock lobbied for lawmakers to take the government out of the electricity market as much as possible.
"Over the last 10-plus years, we've seen this movement toward regulation in the market and that's why we are seeing this crisis today of much higher prices and much lower reliability. It's not because the markets don't work, it's because what we have today is not a market. We have politicians and bureaucrats running our electric grid and pretending it's a market," Peacock said.
Peacock pointed to Sen. Bob Hall's bill, SB 1752, as a better path forward for the state's grid. Hall's bill restricts the number of subsidies given to wind and solar generators and takes steps to make them pay for the costs they impose on the grid due to intermittent generation.
Research recently published by the Energy Alliance reported that since 2007, wind and solar generators in Texas collected $66 billion in investments. Additionally, 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%, projecting that figure would grow to 37% by the end of 2023.