TXOGA president on Texas power grid reform: 'Any plan adopted must ensure reliability services, insist that generators are paid for real-time performance'

The Texas Association of Manufacturers (TAM) and the Texas Oil and Gas Association (TXOGA) voiced their concerns about the Public Utility Commission's (PUC) plan to redesign the Texas energy grid. 

The associations both said that the PUC was pushing for a novel grid model and moving away from a focus on performance and competition. They criticized the price tag of the plan as well, which TXOGA indicated was $5.7 billion annually.

The development of the PUC's plan took place following the severe winter storm Uri in 2021, which brought record snow and frigid temps, leaving millions of Texans without power.

According to the State of Texas, Governor Greg Abbott directed the PUC to "take immediate action" in order to improve grid reliability across the state. The Texas Legislature also passed a slate of laws addressing the shortcomings of the grid. 

Abbott's directive specifically instructed the PUC to incentivize reliable sources of generation and make unreliable generators pay for their shortcomings. Legislative actions required generators to provide ancillary services on a competitive basis during times of low production.

Therefore, TXOGA put out a statement voicing its concern and criticism of the PUC's plan.  

 "As some of the state’s biggest consumers of electricity, we look forward to working to ensure the final outcome is good for Texas," TXOGA President Todd Staples said in a press release. "Any plan adopted must ensure reliability services, insist that generators are paid for real-time performance–this will increase market revenues available to support new investment while addressing the actual reliability in ERCOT (Electric Reliability Council of Texas).” 

As reported by TXOGA, the statement questioned whether the plan would be able to "maintain a market-driven system that provides both reliability and affordability to consumers". TXOGA also suggested the Texas Legislature could get involved again if the plan is not altered.

In addition, the Texas Association of Manufacturers (TAM) also released a statement showing its displeasure with the PUC's grid plan. 

The association said it is committed to solutions that "preserve our competitive market". TAM hopes any redesign or changes will "avoid a government-mandated capacity market or other similar electricity taxes or fees to support incumbent generators".

Additionally, the PUC's plan also drew opposition from legislators who deem the plan to be non-compliant. 

Following the release of the PUC's plan, the Austin Journal reported the Texas Senate Committee on Business and Commerce said the plan has fallen short of the directives of the Legislature. 

Senators Donna Campbell (R-New Braunfels) and Lois Kolkhorst (R-Brenham) both made public comments indicating their disapproval of the PUC plan and reiterating their concerns over the unreliable and costly nature of the current grid conditions.

In a letter, Senator Charles Schwertner (R-Georgetown) wrote to the PUC that its plan did not comply with the requirements of Senate Bill 3, a piece of legislation that he authored that created several new requirements to ensure grid reliability, including the need to supply ancillary services if generation is low.

In a letter signed by all of the committee members, the Committee said the PUC did "not include any evaluation of the dispatchable ancillary or reliability service directed by SB 3."