Your Public Utility Commission is trying to fix the electricity market to prevent further blackouts. One of the proposals could reduce competition from new energy resources, lead to higher costs, eliminate needed checks and balances, and increase the potential for future blackouts.
That plan would require utilities to contract with generators to be available three years in advance, with strong incentives imposed to encourage contracts with “reliable and dispatchable” plants. Unless a different technology comes along, that means natural gas, coal or nuclear. This preference for traditional generation resources would eliminate some of the competition that has resulted in lower electricity cost.
During the freeze this month, about 20% of the natural gas system that fuels some of those so-called reliable and dispatchable generation resources froze again and as a result, 10% of the power plants shut down. Some of these “reliable” plants have had to shut in heat waves because their cooling water overheated. Building more of this type of power plant is a bad idea at a time when scientists predict worsening winter storms, heat waves, droughts and hurricanes due to our changing climate.
Forty years ago, Democratic challenger Mark White beat Republican Gov. Bill Clements because of out-of-control electric bills caused by a series of storms. As a consumer advocate working in the Capitol, I watched a cycle of failed reforms lead to building a series of oversized, over-budget power plants, raising rates and enriching the utilities.
Finally, Republican Gov. George W. Bush ran and won on introducing competition to the electricity market. He put the risk of building power plants and market failure on the industry. Instead of energy generation companies each owning and operating a bunch of plants that were idle most of the time, he created a market that allowed utilities to buy and sell excess energy, reducing inefficiency and lowering costs. New plants replaced old, and new types of energy resources (especially wind and now solar) came into the market.
Why did this restructured electric market fail last February? The Legislature, Railroad Commission and the PUC failed to require winterization of natural gas supplies and power plants.
The gas system failed in 2011, 2014, 2018, and again in 2021. It didn’t produce enough fuel for power plants to operate, but the generators bore the risk of this failure to deliver and paid a higher price for what limited fuel was available.
Those costs are soon passed along to retail customers, but 2021 was worse than that. When an electricity provider cannot pay the market price for the power customers need, those costs are socialized across all providers and find their way to retail customer bills. But last year, the costs were so great, the Legislature and regulators have allowed the electric grid operator to issue debt to make up the losses. Who will repay that debt? Customers.
What would keep the lights on, lower costs and prepare for the future?
Make the failure of our state leaders to keep the lights on the biggest issue in the upcoming election for governor and the Railroad Commission. Demand they share their reform plans. And vote them out if their plans aren’t good enough.
After 40 years around the Capitol, I know change occurs only when voters demand it.
Tom “Smitty” Smith is executive director of Texas Electric Transportation Resources. He wrote this column for The Dallas Morning News.