87th LegislatureEnergyState HouseGrid ‘Weatherization,’ In-State ERCOT Board Residency Among Texas Speaker’s Priority List

Weeks after the frigid blackouts that rocked Texas, state officials are moving into their respondence phase. The last two weeks have been spent in evaluation and fact-finding modes with marathon-long hearings questioning energy industry insiders.

Before the winter storm, the 87th legislative session was to be focused on coronavirus and the fiscal strain it wrought on the state’s coffers. But the days-long blackout moved the electricity grid issue up to predominance.

Phelan said of the list, “I am proud the Texas House is leading the charge in protecting consumers, fortifying our grid, and creating clear lines of communication and authority during extreme weather events.”

“We must take accountability, close critical gaps in our system, and prevent these breakdowns from ever happening again.”

Below are the seven pieces of legislation named by Phelan.

House Bill 10

Shortly into the blackouts, the out-of-state residencies of various Electric Reliability Council of Texas (ERCOT) board members became roundly criticized. Governor Greg Abbott added ERCOT reform to his emergency item list — among it an in-state residency requirement  — and goaded the legislature to act. Legislators were instantly receptive, calling for such legislation immediately.

While a number of legislators have filed similar bills, House Bill (HB) 10 stands a head above the rest due to the speaker’s priority. Filed by State Affairs Committee chair, Rep. Chris Paddie (R-Marshall), HB 10 would institute that in-state residential requirement, not only to serve on the ERCOT board of directors, but also as the chief executive officer.

The bill would also expand the ERCOT board to include a member explicitly representing residential consumer interests and two at-large members, each appointed by the governor. Additionally, the lt. governor and speaker of the house would each get to appoint a board member.

Those appointed positions would serve two-year terms and be staggered with three positions expiring in odd years and two expiring in even years.

The ERCOT board is made up of market segment appointees representing specific industry sectors and a few unaffiliated positions. Each board member term currently lasts one year and must be renewed annually.

House Bill 11

Due to the generation and energy supply problems, calls for the “weatherization” of infrastructure from the wellhead to the light switch have become a large part of the response. Texas’ energy infrastructure is set up to weather extreme heat during the dead of summer, but the severity and length of the cold caused problems for the power industry.

Safeguarding infrastructure is not a foreign concept to Texas’ energy sector, and emergency measures were taken by power generators but it wasn’t enough to stave off the cold for a number of different reasons. However, there is no requirement that the electricity industry fully weatherizes, whether for frigid temperatures or sweltering heat. To date, it’s merely been a good practice — if for no other reason than the companies’ bottom line.

But after the blackouts, many believe that is not enough.

HB 11, also authored by Paddie, would establish in code a requirement that energy suppliers and power generators safeguard against temperatures below 10 degrees that last for longer than 24 hours. It also requires weatherization against National Weather Service-issued heat advisories.

While weatherization against both simultaneously is the goal, the application may be trickier than at first thought. In the northern part of the country, the prototypical method for protecting against severe cold is to build structures around critical infrastructure. But most of those places are not often faced with the triple-digit heat Texas is. That method would inhibit Texas facilities’ resistance to heat, making the solution more complicated.

House Bill 12

Communication was a constant theme during the hearings on Texas’ blackouts. Information between state officials and ERCOT was traded, but the transmission was neglected in notifying the public. Surely, notifications of minute-by-minute, and sometimes second-by-second, developments are no easy lift.

Rep. Richard Peña Raymond’s (D-Laredo) HB 12 attempts to solve that dilemma by commissioning a study on the establishment of a Statewide Disaster Alert System.

The whole purpose of such a system is to bridge the communication gap between the intensely attuned industry, the high-level state officials, the local governments, and the public writ large.

HB 12 also requires the findings of that study to be implemented. Its deployment must “assist a person affected by the disaster with making informed decisions regarding the person’s safety; and enable a person in another location in this state to assist an affected person.”

House Bill 13

Paddie’s third bill in this priority list has yet to be filed, but according to Phelan, it would establish a disaster response council composed of ERCOT, the Public Utility Commission (PUC), the Railroad Commission, and the Texas Division of Emergency Management.

The legislation would aim to “identify challenges with fuel supplies, repairs, energy operations and prevent service interruptions from the wellhead to the consumer.”

While the various agencies and organizations worked with state leaders during the winter storm event, there was no specific body convened of those stakeholders to coordinate in an official capacity.

House Bill 14

While natural gas supplied the vast majority of the available power during the winter storm, it still faced some cold weather hiccups that exacerbated Texas’ problems. In the hearings, power generators testified that there was not enough gas in the pipelines to push it all fast enough to the generators. The pipelines also faced pressure issues caused by the cold weather.

However, it has also been stated that power had been turned off for many gas drillers at the wellheads. That created a self-fulfilling cycle of lacking the power necessary to provide the fuel necessary to generate electricity.

Similar in effect to Paddie’s weatherization bill, Rep. Craig Goldman’s (R-Fort Worth) HB 14 would command weatherization for gas extraction and delivery. The bill would require “the Railroad Commission to adopt rules requiring gas pipeline operators to implement measures that ensure service quality and reliability during an extreme weather emergency, which covers winter and heat wave conditions.”

The bill has yet to be filed.

House Bill 16

During the winter storm, some Texans were shocked with utility bills in the thousands of dollars for only a couple of days of service. These bills stemmed from the exorbitantly-high wholesale electricity prices trading on the ERCOT market — which were in no small part derived from a PUC order to raise costs up to their $9,000 per megawatt-hour (MWh) cap, at which they remained for days.

The state will likely step in to help those customers, most of which have plans with electricity wholesalers like Griddy. Most residential customers are on fixed-rate plans, and thus only saw an increase if their consumption went up. But Griddy’s wholesale-indexed plans rise and fall with the cost on the ERCOT market — thus tying the PUC’s decision to customers’ pocketbooks.

After the utility bills landed, legislators and many others — including NRG Energy CEO Mauricio Gutierrez — stated these plans shouldn’t be available for residential customers due to their complexity.

Rep. Ana Hernandez’s (D-Houston) HB 16 would codify that prohibition. “A retail electric provider may not offer a wholesale indexed product to a residential customer,” it states, and further tasks the PUC with enforcing the provision.

Griddy has been sued by Texas’ Office of the Attorney General for “misleading marketing” and now faces a prohibition on a large chunk of their business model in the state. Should HB 16 pass, however, commercial and industrial consumers would still be able to use wholesale-indexed plans.

House Bill 17

The winter storm kicked the energy source hornet’s nest that had been buzzing for decades.

That fight crescendoed between reliability-focused supporters of traditional thermal-type energy and diversification-focused renewable advocates as wind energy produced at a fraction of its installed capacity, a south Texas nuclear plant faltered, and natural gas experienced cold weather impediments.

Texas has maintained an all-of-the-above approach to the sources of its electricity, and the best path forward for its energy sector rests in the eye of the beholder. But HB 17 appears to be an attempt to maintain, or at least support, that all-of-the-above mentality.

Authored by Rep. Joe Deshotel (D-Beaumont), the bill would forbid authorities of any stripe to prohibit grid connection for consumers based on the planned source of its energy — whether that’s natural gas, coal, wind, solar, or nuclear. It also forbids pricing differences based on the energy source.

However, the bill stipulates, “This section does not limit the ability of a regulatory authority or political subdivision to choose utility services for properties owned by the regulatory authority or political subdivision.”

This bill would aim to prohibit authorities from picking losers. They would not be able to, through official action or order, promote one energy source at the expense of another. Movements to ban natural gas as a source of electricity generation are popping up among certain progressive-minded enclaves. The first U.S. city to do so was Berkeley, and HB 17 would preclude any such effort in Texas.