Bills aimed at adding more natural gas power to Texas grid clear Senate

Vistra Corp.’s Midlothian Power Plant opened its doors to media on October 15, 2021 to show the plant’s weatherization process. Energy providers like Vistra are preparing their plants for extreme weather conditions following the February winter storm Uri, which disrupted the Texas electric grid and led to the deaths of more than 200 people. (Credit: Shelby Tauber for The Texas Tribune)

The Texas Senate on Wednesday approved two major bills aimed at building more on-demand power generators such as natural gas-fueled plants in the state. The goal of the bills, according to the sponsors, is to prevent another catastrophic power shortage like the one that killed more than 200 people in 2021 as freezing temperatures knocked power production offline and left millions of Texans shivering in the dark.

Lawmakers passed Senate Bill 6 and Senate Bill 7 by votes of 22-9 and 31-0, respectively. The bills represent a push toward funneling more money to natural gas energy production in the state, which supporters say will improve the electric grid because those generators can essentially come on with the flip of a switch. Lt. Gov. Dan Patrick named both bills as priorities earlier in the session.

Sen. Phil King, R-Weatherford, reminded the other lawmakers on the floor that, keeping the 2021 tragedy in mind, they could “not go home without having come up with a deal, with a package of bills that makes sure that we’re on the path to never seeing something like that happen again.” Sen. Charles Schwertner, R-Georgetown, the lead author on both bills, moved to pass Senate Bill 6 “in memory of the hundreds of Texans that died and the millions of Texans that suffered.”

Critics, however, say that both bills could lead to untold billions in added costs to customers and minimal benefits while ignoring needed efforts at reducing electricity demand and eliminating greenhouse gas emissions that are driving climate change. All power generation types struggled during the 2021 storm, and gas-fueled plants were far from immune, with some failing to operate or to get enough natural gas supply during the storm.

SB 6 would direct state funds or electricity customer payments to hire one or several entities to build as much as 10 gigawatts — enough to power 2 million homes during peak electricity demand — of what’s likely to be natural gas-fueled power plants that would come online and potentially run for days only in cases of emergency. Schwertner has referred to it as an insurance policy against disaster and argued it’s the only bill that “absolutely guarantees” new, on-demand power generation.

Sen. José Menéndez, D-San Antonio, has cautioned his Senate colleagues against overcorrecting in order to send a message to constituents that they fixed the problems from the horrific 2021 storm. Everyone from residents on fixed incomes to mom and pop business owners would be paying for this through tax dollars or rate increases, Menéndez has said.

“My concern is that sometimes it feels like we may be losing sight of the basic fundamentals,” Menéndez said to legislators before the floor vote. “If a lot of the power we generate is being lost, whether in our constituents’ homes due to lack of weatherization, in our plants due to the lack of efficiency … my concern is that we go out and build something that might be a little more than we needed if we had already put more efficiency in.”

Critics have questioned whether state-funded plants would truly stay offline until an emergency strikes or would instead be turned on more often and interfere with market competition. Opponents have also argued it would be inefficient to let a gas plant sit dormant, and consumer advocates have raised concerns about rising bills for consumers.

The Senate Finance Committee set aside $10 billion in its budget proposal to fund at least part of the cost to build the plants proposed in Senate Bill 6, but the House version of the budget does not have the same allocation.

“It represents a costly tax on consumers that does not improve reliability,” said Michele Richmond, executive director of the Texas Competitive Power Advocates, which represents natural gas power generators. “Unfortunately, it sends a clear message that Texas does not believe in the competitive market and will result in state-owned generation systemwide.”

In the competitive electricity market operated by the Electric Reliability Council of Texas, SB 7 would create a financial incentive to encourage the private development of energy generation resources that can come on within two hours and run for at least four hours, such as natural gas plants or batteries. The run time could be made longer in the future. The bill would also establish a complex way for power providers and power producers to pay for such incentives, based in part on how much they were producing and how reliably they were performing.

Schwertner likened this bill to a “slowly moving ocean liner that slowly changes the overall market structure.”

Payments for the new incentive would essentially be a tax, potentially pushing resources out of business, said Pablo Vegas, president and CEO of ERCOT, who spoke on the bill at a committee hearing. Vegas said the concept would probably slow renewable energy development and could force renewable energy producers out of the market in the short term.

Sen. Judith Zaffirini, D-Laredo, said Monday before a Senate committee passed the two bills that she worried SB 6 focused too much on electricity generation and not on solutions like reducing electricity demand. She was also concerned it would unnecessarily punish renewable energy generation. She voted “present” on SB 6 and for SB 7 in committee, as did the other two committee Democrats, saying she wanted to be part of the process. On Wednesday, she praised the final version of SB 7, saying “it shows what we can do when we work together.”

The Senate has already passed other components of the package of electricity-related bills that legislators laid out early in the session. These include Senate Bill 1287, which would require power generators in certain circumstances to pay for some of the transmission costs to connect to the grid, a bill that’s targeted at renewable energy developers who build far away from the grid, and Senate Bill 2014, which makes it voluntary for power providers to purchase renewable energy credits that were created decades ago to incentivize renewable energy development.

Also on Wednesday, they passed Senate Bill 2015, which aims conversely to incentivize on-demand power resources, which would not include wind or solar since the wind doesn’t constantly blow and the sun doesn’t shine at night, and Senate Bill 2012, which would establish guidelines for the electricity market redesign solution that the Public Utility Commission put forward earlier this year to create a financial reason for building more on-demand power generators.

“There is no perfect bill,” Schwertner said before the Senate Business and Commerce Committee passed the two bills Monday. “It is not a single-shot fix to what we need to do as a state, but I do think that the package in totality answers the concerns of the people of Texas and provides a framework to move Texas forward regarding re-balancing dispatchable and interruptible generation resources and addressing the long-term needs of our grid.”

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