The Senate Committee on Business & Commerce met on April 3 to adopt committee substitutes and vote out electric market design bills SB 6 (Schwertner), SJR 1 (Schwertner), SB 7 (Schwertner), and SB 2012 (Schwertner). A video archive of the hearing is available here.

This report is intended to give you an overview and highlight the various topics taken up. It is not a verbatim transcript of the discussions but is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.

 

Opening Comments

  • Chair Schwertner – Appreciate feedback received from committee members and stakeholders on path for the electric grid, have had a lot of suggestions; bills will be party of a package the Senate will be moving to address concerns
    • Schwertner – Not a single bill, but the package in totality answers the people of Texas and provides a framework for balancing dispatchable & renewable resources
  • Johnson – Each of the bills has a good deal of work to be done to be comfortable heading down the right path; in order to function well together, need to function well individually; there are other ideas & elements of the grid that need to be addressed, votes today are reflective of the ongoing effort
  • Menendez – Echo Sen. Johnson’s comments, appreciate the hard work; share the goal of providing every Texan the certainty of flipping a switch and having heat & power; hopefully will continue to work moving forward
  • Zaffirini – Have had concerns from the beginning & maintain those concerns, but votes reflect ongoing work; vote in committee does not predict vote on the floor
    • Zaffirini – Concerns include measures being re-regulation, focusing too much on supply side and not enough on demand side; understand there are other bills and amendments are possible
    • Zaffirini – Other concern is that some bills seem to target renewables; in order to vote ‘yes’ on the floor need to be part of the process
  • Campbell – Not one fix to fit the multitude of things uncovered as a problem with the grid, when they come together will increase resiliency of grid, still a work in progress
  • Schwertner – CSs offered here are the second CSs, had extensive feedback from stakeholders, environmental groups, agencies, etc.; will be withdrawing old CS and offering new CS that address second round of concern

 

SB 6 (Schwertner) Relating to the establishment of the Texas Energy Insurance Program and other funding mechanisms to support the construction and operation of electric generating facilities.

  • previous CS withdrawn, new CS laid out
  • Schwertner – CS based on further input from over 20 major stakeholders, changes timeline to build transmission for the insurance asset to 270 days
  • Directs PUC & ERCOT to put projects for insurance at the top of queue, air permitting at TCEQ to top as well for building
  • Removes provisions for bidding on RFP that were restrictive
  • Limits ability to receive Stranded Cost Recovery
  • Mandates that energy insurance assets only turn on prior to load shed for the whole state, regional
  • Loans have 0% rather than PUC determining
  • Asset moves into competitive market after 40 years
  • Clarifies that insurance assets cannot compete in day ahead or real time markets
  • PUC should continue to consider fixes
  • Preference given to generators who haven’t received a loan before
  • Allows loan funds to go to weatherization
  • Johnson – Main concern with SB 6 is the likely size & scope, have heard concerns that off market backup could negatively impact competitive market; people have worked hard to make sure this works differently than CA with offsetting measures, etc.
    • Johnson – Concerned that scope is too large and needs to work in conjunction with the system, that said appreciate the work, it is different than what is being done, and appreciate changes in CS
  • Menendez – In this, have desire to build 10k megawatts, if we reduce to the ERCOT reserve at 6k megawatts would have much less impact on market, would be much less expensive
    • Menendez – Rather than strengthening grid, having emergency only scenario seems a little odd; size of program seems large & costly
  • Schwertner – Texas Energy Insurance program speaks to concerns of Texans regarding what we do when there is unanticipated extreme heat or cold, if we have enough backup electricity to prevent grid outage; insurance system similar to generator at your House, stands behind energy only market in Texas
    • Schwertner – Speaks to RFP on who can participate, when it will be utilized, etc., addresses great concern and fear
  • Johnson – Does address concerns of the public, if program was scaled down could use funds to make gains on the demand side & would be quickly deployable; would like to see more resources devoted to reducing amount of electricity needed in tandem with producing more
  • King – This is adding another aspect that doesn’t touch the ERCOT market, available as a fallback and only activates if the market goes away; this is a separate line to the load that only activates in emergency
    • Schwertner – Backup system only used in time of extreme need
  • King – So this is actually separated from the generation?
    • Correct
  • New CS adopted
  • CSSB 6 voted out (8-3 PNV)

 

SJR 1 (Schwertner) Proposing a constitutional amendment providing for the creation of the Texas energy insurance fund and the authorization of other funding mechanisms to support the construction and operation of electric generating facilities.

  • CS adopted
  • CSSJR 1 voted out (8-3 PNV)

 

SB 7 (Schwertner) Relating to the reliability of the ERCOT power grid.

  • Previous CS withdrawn, new CS laid out
  • Schwertner- Ties PCM guardrails to firming calculations, removes number of hours for calculating firming, moves from once to twice a year
  • Peak for calculation at 100 hours
  • Changes LSC calculation so it doesn’t unfairly harm residential load
  • Changes 4 hour runtime to 10 hour runtime requirement for DRSS
  • PCM cannot start until all aspect are implemented, but does allow PCM to be scaled
  • Guardrails for PCM does not imply PUC must implement PCM if PUC determines others are effective
  • Zaffirini – Does CS remove batteries form the definition of dispatchable resources?
    • Schwertner – It does not, but does require 10 hour runtime which is not what batteries can achieve currently
  • Zaffirini – So it does remove batteries?
    • Schwertner – At the current time, but over time they could participate in DRSS
  • Zaffirini – Vote for this bill will not necessarily reflect vote on the floor and would like to continue to address
  • New CS adopted
  • CSSB 7 voted out (11-0)

 

SB 2012 (Schwertner) Relating to electricity services; increasing an administrative penalty.

  • Previous CS withdrawn, new CS laid out
  • Schwertner – PCM guardrail bill, cleans up language ties to voluntary mitigation plans to make consistent with other legislation
  • Removes $1m penalty tied to SB 3
  • Removes language tied to seasonally procuring ancillary services as it could affect all ancillary services
  • Clarifies and adds more protections to PCM, incl. 1) preventing unfair costs assigned to companies owning both generation and retail, 2) preventing credits form resources they own, 3) PCM cannot start until all aspects are implemented but can scale up, 4) PUC doesn’t have to implement the PCM
  • Removes cap on retail market share, but keeps reporting
  • Safety net provision kicks in 4 years after implementation with review by PUC
  • Also allows competitive bid for RFP outside of TDUs
  • Rates paid to safety net facilities work like rates for non-ERCOT providers
  • Zaffirini – Would like to discuss amendment making PCM tech neutral, would also like to change dispatchable generators to dispatchable resources
    • Schwertner – Open to discuss
  • New CS adopted
  • CSSB 2012 voted out to Senate (11-0)

 

Closing comments

  • Schwertner – Appreciate interest shown, if you have any suggestions please get those to us; look forward to moving bills along hopefully on Thursday on the floor