For a decade, including during the most recent legislative session, state leaders in Texas have mostly ignored the potential to reduce energy demand through energy efficiency and demand response. That negligence had massive consequences in February, when a winter storm led to outages in much of the state and hundreds of Texans died.

There were many reasons for the outages; a key one was a record high demand for electricity driven not only by extreme cold but also by inefficient heating and air conditioning systems in poorly insulated buildings.

By focusing more on strategies that use advanced technologies to reduce demand when supplies get tight, Texas can avoid future disasters and strengthen the grid in ways that are better for consumers and the economy.

Electric grids can be reliable, affordable, and clean; anyone who says we can’t have all three is presenting a false choice. But that requires policymakers to do many things right. There are no panaceas or silver bullets — no “one thing” that will take care of it all. Every energy resource has problems and limitations. 

That means we need a great diversity of resources — on both the supply side and demand side.  

I wrote last week about how tapping demand-side resources could help alleviate these problems. This week, I’ll focus on diversifying the supply side, specifically with geothermal power, long-duration energy storage, and greater geographic dispersion of wind energy and the transmission to move it. All of these things will increase reliability, lower costs, and reduce emissions…

It’s really hot right now, so naturally, I’m thinking about winter. 

Summer grid challenges are large — I’ve written about them here and here — but winter challenges are much larger. The US has now experienced five major winter outages in the last 11 years; the biggest of them all was in Texas in the winter of 2021. 

Gas supply and gas power plant failures triggered every one of those winter outages. As acting Federal Energy Regulatory Commission Chair Willie Phillips said of gas supply and electricity grids, “People treat these two systems as if they’re different” but they're “more interconnected today than they’ve ever been.” 

In the winter, when gas goes down, the likelihood of power outages goes up. 

It’s important to note that the gas system has had significant problems in the Texas heat, too. Thankfully, our wealth of solar power has made that a moot concern … for now. But solar can’t bail out failing thermal plants on long winter nights, especially given “consistently increasing outage rates for coal.” 

The North American Electric Reliability Corporation (NERC) also noted “the unavailability of the gas-fired generation fleet in recent years has been consistently higher during the winter months.” And Phillips recently remarked pointedly, “We don’t have a reliability organization for the gas system,” adding that while NERC has statutory authority for grid reliability, there’s a “reliability gap” for gas.

It’s time for Texans to get serious about year-round solutions to our grid challenges. That includes diversifying our approach to extreme heat and extreme cold…

Last month’s heatwave killed at least 20 people and sent thousands more to emergency rooms across Texas.

Most people think about grid reliability in terms of overall supply and demand. But for millions of Texas families living paycheck-to-paycheck, reliability is about whether or not they can afford their bills. 

Back in November, the Dallas Morning News reported that nearly 45% of Texans had to skip buying food or medicine to pay their energy bills. Imagine having to decide whether air conditioning or insulin or dinner was a bigger need for your family. Which would you choose?

The usually hottest part of the summer is still weeks away and the heat is getting worse every year. The higher the temperature, the higher the energy use, the higher the electric bills.

This is an affordability crisis, but too often, it’s greeted with a shrug — or outright denial…

It’s a hellacious week, even by Texas standards. A heat dome is sitting over Texas, and temperatures will be well above 100 in most of the state all week. 

Unfortunately, it’s not hard to imagine this kind of heat getting worse — far worse — later this summer and especially in future years. Climate experts can’t quantify the upper bounds of what’s possible but suffice it to say we haven’t experienced it yet. Outrageous heat and greenhouse gas-fueled climate extremes are the new normal, and we’d better get prepared. 

I wrote last week about how solar, storage, and commercial demand response are making a determinative difference this summer in keeping Texans’ lights on and air conditioning running. But that may not be enough when the heat gets even worse, which it will. 

So let’s look at some additional tools that could make the grid more reliable over both the short and long term…

Yesterday marked the first official day of summer, and the weather forecast already looks like a nightmare.

ERCOT kicked off the season with its first official energy conservation call this week. As I’ve said, it’s still unlikely that Texas will have blackouts this summer.

But the likelihood is greater than it was this time last summer. And it’s still going to increase each summer going forward, as rising greenhouse gas emissions load the dice and increase the probability of deadly heat waves like this one.

The current heat dome sitting over Texas would be “basically impossible” without climate change. There is absolutely zero doubt in the scientific literature that human caused climate change is making heat waves more intense, more frequent, and longer lasting. 

But see if Governor Abbott, his appointees, and other leaders will even say “climate change” let alone do something about it. But climate change isn’t the tooth fairy — it exists whether or not politicians believe in it. 

Texas is ground zero for climate change. We’ve got it all: heat waves, droughts, hurricanes, wildfires, floods, deadly freezes … the list goes on. It’s time our political leaders, including the political appointees at the PUCT and ERCOT finally deal with the reality.

It’s the end of a tumultuous two years at the Public Utility Commission — and hopefully the beginning of a very different era. The Governor’s office announced last week the appointment of Commissioner Kathleen Jackson as interim Chair of the PUC; an announcement of a longer-term Chair will likely come later this year.

The new PUC leadership needs to quickly establish a more participatory and collaborative approach — for both stakeholders and the public at large. This means listening to the public, significantly improving opportunities for input, and convening stakeholders in ways that create compromise and lasting change.

Stakeholders are ready for change

For two years, stakeholders have been at each other’s throats — far more than is typical at the commission. First and foremost, a new Chair must openly acknowledge that no one solution will fix the problems with Texas’ grid. The PUCT and ERCOT will have to do dozens of things well; that demands active participation from a broad group of stakeholders. 

Finding the right mix of solutions requires more collaborative leadership. That’s not easy — it’s quite hard — but it’s been done. In the late ‘90s and early aughts, PUCT Chairs Pat Wood, Becky Klein, and Barry Smitherman all had tenures characterized by collaboration with the Legislature, stakeholders, and the public. People involved in energy policy back then admit that they never got everything they wanted, but they got a lot of it. The other side didn’t get everything either, and there were more resolutions where everyone won.

Wood, Klein, and Smitherman didn’t start with a solution, but rather with a problem statement. From there, they worked with the broadest cross section of interests and the public, distilling promising solutions into a system that worked. 

Since then, the agency has been run far less collaboratively… 

Oil and gas companies have been buying clean Texas energy for years. They do it because it’s good business. Renewable resources such as solar and wind power provide low cost electricity in areas like the Permian Basin, where oil and gas companies need power — lots of power — to run their operations.

Some oil and gas interests also have been funding right wing “think tanks” for years, in part to support policies that help their companies.

But the attack dogs they’ve funded are coming after the affordable energy they increasingly want — and need — to buy.

The Texas Public Policy Foundation is the prime example. Presenting itself as a guardian of oil and gas, TPPF is in the midst of a years-long crusade against the clean energy generators that are lowering customer bills and expanding the state’s energy leadership.

Unfortunately for their benefactors, the right wing fanatics they have so generously funded see the coming decade as a zero-sum cage match, with oil and gas on one side and renewables on the other.

But that doesn’t match the reality.

Late Sunday — after the Texas Legislature, at the 11th hour, passed monumental electricity grid bills that stitched together a range of energy proposals that many had assumed to be dead — a friend asked on Twitter, “Does this mean the grid is fixed?” 

No. Not even close.

Over the past 20 weeks, state leaders have, with frightening consistency, focused on the wrong energy-related issues. They wasted time and energy attacking Texas’ nation-leading clean energy sector — something most states and countries pine for — while ignoring consumer-centric solutions that would reduce bills and increase reliability.

The only good news as the 88th legislative session came to a close was the surprising lack of bad news. 

Bad bills that died (or got better)

A remarkable coalition of environmentalists, industry organizations and business groups — including more than 50 chambers of commerce, manufacturers, generators, oil & gas advocates, and others — stopped very real efforts to shut down the renewable energy industry in Texas. 

As attack after attack rolled out of the Texas Senate, the state House of Representatives consistently raised red flags about the effects of such legislation on consumers. House State Affairs Committee Chairman Todd Hunter — a pro-business, anti-nonsense Republican from Corpus Christi — often led the questioning on behalf of consumers. And most anti-renewable bills could not stand up to that scrutiny…

Throughout the legislative session, Chairman Todd Hunter has spoken up — and acted — on behalf of consumers. “I want to protect the consumer,”  he said on the House floor while successfully defending a cap on the cost of electricity capacity in the ERCOT market.

After a series of dangerous Senate votes, Hunter and other House members have one more opportunity to protect Texas consumers in the final days of the legislative session.  

For consumers, it feels like a last stand.

Over a whirlwind and confusing 45 minutes Wednesday evening, senators tacked 15 amendments onto House Bill 1500, a significant but somewhat routine bill designed to improve the efficiency and effectiveness of the Public Utility Commission and ERCOT. Senators sometimes seemed to be voting blind — in some cases, no printed amendments were distributed and Senators didn’t seem to know exactly what they were voting on…

By this time next week, the 88th Texas Regular Legislative Session will be over.

Make no mistake: none of the grid bills under consideration today and throughout the week do much to improve grid reliability. The most impactful bills — including proposals to increase energy efficiency and create opportunities for consumers to get paid to reduce demand at times of scarcity — are all but dead.

The bills that are likely to pass are primarily about redesigning the ERCOT market to pay incumbent generators more money (SB 7 and SB 2012) or giving subsidies to new gas plants (SB 2627 and SJR 93). The February 2021 blackouts, which supposedly prompted this legislation, were due to lack of winterization of gas supply, power plants, and homes and buildings. ERCOT had plenty of capacity, but half of it didn’t work in the extreme cold, ice, and snow.

So these bills do not address the root causes of those outages. Instead, the biggest debates today will likely be over whether to raise consumer costs by only a few billion dollars, or by tens of billions of dollars.

As the Texas Legislature enters the final sprint, big power generators are putting pressure on policymakers to approve a massive increase in their revenues — with as few consumer protections as possible. Some legislators seem compelled to go along for the ride.

The cap the generators want is effectively no cap at all: $9 billion per year. If they get their way, the Governor can take his Site Selection Magazine Governor’s Cup, put it on a bus, and send it straight to, say, Florida. 

Manufacturers and large employers have warned state leaders that this massive giveaway to generators will dramatically hurt their bottom lines. Residential and small commercial consumers can expect 30-40% bill increases if a cost cap doesn’t make it into law. The number of Texans who see their power shut-off — because they’ll no longer be able to afford their electric bills — would skyrocket…

Today, the American Council for an Energy Efficient Economy released an astounding report showing that Texas could slash electricity demand by more than 16,000 megawatts in winter through the widespread use of efficient heat pumps, smart thermostats, and demand response programs aimed at electric vehicles.

That’s more than 80% of the missing megawatts during Uri; ERCOT demand was about 20,000 megawatts more than available supply.

It’s also about 20% of the peak demand that the PUC and ERCOT leaders fretted over last week and 50% more capacity than the infamous Berkshire Hathaway spending binge would create.

The cost savings are about as dramatic. The Berkshire Hathaway plan is now projected to cost $18 billion; to reduce the same amount of power, if utilities and policymakers focused on three highly cost effective offerings (heat pumps, thermostats, and EV demand response), runs about $100 million per year .

Another comparison: the Lieutenant Governor’s newest proposal for zero-interest loans and “completion bonuses” for gas plants is estimated to cost Texans about $1 billion for every gigawatt of electricity that’s added to the grid. The ACEEE study shows that Texas could cut a gigawatt of demand for about $42 million or less than1/20th of that cost — 95% less…

As the clock ticks down on this year’s session, the Texas Legislature is on the threshold of making game-changing decisions to improve — or not to improve — grid reliability in the state. 

The Senate has a very checkered record on energy bills this year — but it also has, to its credit, passed a bipartisan trio of praiseworthy bills focused on energy efficiency (SB 258), demand response (SB 114), and distributed energy resources (or DERs; SB 2112). 

Now, the ball is in the House's court. It has just more than two weeks to pass these critical bills.

The need for the bills has never been clearer. Even in their deeply problematic and misleading press conference last week, ERCOT CEO Pablo Vegas and PUC Chair Peter Lake talked about addressing the grid’s supply and demand challenges. The Independent Market Monitor, meanwhile, points to the lack of operational flexibility as the state’s main challenge. 

Either way, solutions like efficiency, demand response and DERs provide a cost-effective, speedy way to bolster flexibility and improve grid reliability. No matter how you look at it, the demand side must be part of the solution.

I’ll write in coming days about efficiency and demand response. Today, let’s focus on DERs.

The sky is falling. And everything is great!

Such was the message at a bizarre PUC and ERCOT press conference Wednesday. Ostensibly, the purpose was to release two reports on grid reliability. Instead, it turned into a political exercise — another effort to spin Texas’ ongoing grid problems as something somehow caused by the state’s nation-leading clean energy resources.

“The grid is more reliable than ever,” said ERCOT CEO Pablo Vegas. Also Vegas: There is a “higher risk of emergency operations” this summer compared to last. So more reliable than ever… except for last summer?

Said PUC Chair Peter Lake: “The risk of brief periods of load shed has increased.”

Got it. More reliable than ever and more risk of rolling outages. Clear as mud!

So Are There Actually Problems?

Texans continue to list grid reliability as one of their top concerns. Given these mixed messages, that won’t change any time soon — nor should it, given the increasingly obvious political and anti-competitive tilt of the PUC and ERCOT…

With a little less than four weeks to go in the Texas legislative session, things are picking up steam.

A Late Entry

In a very rare move, Chair Schwertner introduced a new bill, Senate Bill 2627, yesterday, and then he passed it out of committee today. The bill filing deadline was nearly two months ago, but the Senate is famously loose with its rules. Expect this bill on the floor very soon, perhaps as soon as this week.

SB 2627 would provide zero-interest loans and a cash grant (Sen. Schwertner is calling it “a completion bonus,” though the bill is silent on the amount of the bonus) for entities that will build new gas plants. The bill currently explicitly excludes energy storage.

It’s unclear why the Senate would exclude storage, particularly various forms of Long Duration Energy Storage, which are not yet otherwise being built in Texas. An example is Form’s iron-air battery, which can last for 100 hours — these kind of subsidies might prompt Form to take a look at Texas for one of its first deployments.

Last winter, heading into the 88th Texas Legislative Session, there was one marquee bad idea to reshape the state’s electricity market.

The Performance Credit Mechanism, or PCM, was dreamed up by a mix of energy companies, Public Utility Commission Chairman Peter Lake, and a consultant that worked for both. It proposed steering billions of Texans’ dollars to thermal generators — in many cases simply to do what they already were doing. It would have dramatically increased power bills with no promise of additional reliability.

Legislators, especially in the Senate, made it clear they hated the idea. The PUC recommended it anyway, just days before the legislative session convened — essentially daring the legislature to create a different system.

In the months since, bad ideas have multiplied like rats. The state Senate has passed at least six bills that would raise consumer costs to previously unimaginable levels. Fortunately, many don’t seem to have gained traction in the House of Representatives, which has taken a far more consumer-centric approach to Texas’ energy challenges.

Make no mistake — those ideas are far from dead. There is more than enough time for Lt. Gov. Dan Patrick to, say, resurrect his proposal for the state to spend $18 billion on gas plants and, in the process, blow up the state’s competitive energy market. We’ll all keep a close eye on those zombie bills over the next month.

But today, let’s focus on the PCM (aka Pretty much a Capacity Market). Because, unlike the Senate’s bad ideas (which you can read more about in this great piece from Lynne Kiesling over at the Knowledge Problem), this one actually seems to have support in the House and from the Governor right now. The next four weeks will determine whether it’s catastrophically terrible, or merely not great, for Texas consumers…

With only six weeks left in the 88th Regular Session, the pressure is mounting. As the countdown to Sine Die (the final day) ticks away, I'll keep you in the loop with regular updates here on Substack and on Twitter.

Here's a sneak peek at what's happening this week.

A Senate Market Design Bill Heads to the House

After the House adjourns on Wednesday, the House State Affairs Committee will dive into one of the Senate's market design bills, SB 2012. The bill aims to control the costs of the Performance Credit Mechanism (PCM); the PCM is a favorite among ERCOT generators but not many others. The bill caps the cost of performance credits at $500 million and mandates real-time co-optimization (RTC) implementation (likely by 2026) before PCM takes effect.

However, the Senate's version includes provisions that would burden renewable energy with the costs of ancillary services and performance credits, ultimately raising consumer costs. It also prevents demand response and storage from earning performance credits, making PCM more expensive and increasing reliability risks, since the state already relies heavily on natural gas. To increase reliability, policymakers need to deal with “correlated risk;” diversifying dispatchable resources to include storage and demand side resources would help. SB 2012 cuts them out.

Thanks to great reporting last week by Mose Buchele of KUT and Naureen Malik and Mitchell Ferman of Bloomberg, Texans finally know that, according to the LCRA’s own estimates, this gas plant building spree will cost almost double what Lt. Gov. Dan Patrick and many senators said it would.

When the Texas House State Affairs Committee heard market reform bills for the first time last week, Chairman Todd Hunter implored witnesses to focus on the Texans who too often have been lost in the conversations about Texas’ energy future: “Now the one name I never hear is the word consumer or public or the taxpayer or the ratepayer. … Look at the impact on the public, the consumer, the ratepayer and the taxpayer.”

Good.

Because Texas consumers and ratepayers will certainly be missing from this week’s energy conversation on the other side of the Capitol. The Senate is poised to approve bills this week that could send electricity costs skyrocketing — no one knows by how much. And Senators, it seems, couldn’t care less…