Energy Exchange

This blog post is co-authored by Marita Mirzatuny and Kate Zerrenner.

In addition to passing tax cuts and making pecan pie the official state pie of Texas, the 83^rd Legislature heard numerous energy-related bills.  As a solution to our Texas Energy Crunch efforts, EDF supported 13 bills that would have provided relief to Texas’ resource adequacy problems; in other words, the issues Texas faces as a result of increasing energy demand, scorching temperatures and a record drought.  Among those bills (which we review on page 13 of our ‘State of the Texas Energy Crunch’ report) are a few, highlighted below, that made some – albeit not enough – progress.

Energy Legislation

A big success this session was the passage of Senate Bill (SB) 385 by Chairman John Carona.  SB 385, or the Property Assessed Clean Energy (PACE) bill, clears some of the hurdles that prohibit commercial and industrial properties from taking advantage of new financing for energy improvements.  PACE allows property owners to pay for water and energy efficiency upgrades or renewable energy improvements with loans, which are then repaid through an annual charge on their property tax bill.  For more on this legislation, please see our recent blog post covering PACE in Texas.

Chairman Carona’s demand response bill, SB 1351, passed and was referred to State Affairs in the House.  Demand response (DR) initiatives allow customers to voluntarily reduce peak electricity use and receive a payment for doing so in response to a signal from their utilities.  Additionally, Chairman Rafael Anchía introduced the companion bill, House Bill (HB) 2194.  HB 2194 allows for customer, or demand-side resources (DSR), from “residential, commercial, and industrial customers to participate in all energy markets” and specifies that DSR “must be designed and implemented in a manner to increase market efficiency, competition, and customer benefits.” This bill clears the way for demand response, renewable energy, and energy efficiency to become important players in the market.

SB 1280, by Senator Kirk Watson, passed out of the Business and Commerce Committee with a seven to two vote.  This bill, regarding Texas’ reserve margin for the electric grid, requires that power regions (such as the Electric Reliability Council of Texas, or ERCOT) estimate the available generation at any given time, the expected peak demand (demand at the hottest part of the day when the most energy is being used) and the amount of reserve energy needed to ensure a reliable electricity supply.  SB 1280 also directs the use of voluntary load participation programs (think demand response) with at least 20 percent of peak energy demand coming from each of the residential, commercial and industrial sectors.

Senator José Rodríguez’s net metering bill, SB 1239, successfully passed out of the Business and Commerce committee.  Texas is one of only seven states where customers are not guaranteed fair compensation for the electricity they provide to the grid.  SB 1239 clarifies that all retail electric providers, municipal utilities and cooperatives must buy back extra electricity from residential customers along with churches and schools at a reasonable, market-based value.  For example, Los Angeles implemented the largest solar buyback program in the nation earlier this year, paying customers 17 cents a kilowatt hour for excess energy produced.

In the House, HB 303 by Representative Eddie Rodriguez called for a new renewable energy goal – to supply 35 percent of energy demand with clean energy by 2020, with at least two percent coming from solar.  This marks an important precedent for the clean energy standards introduced in state legislatures around the country.  Additionally, Representative Rafael Anchía authored HB 2196, a bill that addresses payments to customers for renewable energy and other demand-side contributions to the electric grid.

While it’s great that some of the bills gained some traction, only SB 385 made its way to the Governor’s desk.  With a hotter than average summer approaching, possibly worse than 2011, electric reliability is not a guarantee and these bills would have provided solutions to help address our energy issues.  Already Texas is receiving national attention for our impeding energy shortages.

Source: www.lavacacountytaxpayers.org

Water Legislation

At the last minute, the House and Senate, after much back door negotiating and out front wrangling, approved a plan to fund the State Water Plan.  HB 4, by Chairman Allan Ritter, set up two funding accounts to pay for water projects.  These accounts must be approved by voters, because the bills would amend Texas’ Constitution to allow the plan to be initially funded with a portion of the Rainy Day Fund. Read More »

We have been blogging about the ‘Texas Energy Crunch’ for over a year now, and the issue has attracted attention from the media, the Texas Legislature and even international groups.  During all of that time, the Texas Public Utilities Commission (PUC), Electric Reliability Council of Texas (ERCOT) and stakeholders have continued to try to develop new markets and programs that will help ensure the state of Texas can keep the lights on this summer and into the future.  This seems like as good a time as any to step back and take stock of how far we have come and how far we have left to go.  To that end, EDF released this report: “The State of the Energy Crunch in Texas.”

The Energy Crunch is not a fleeting issue that will go away in the near future. It’s critical that we take action now to preserve our electric grid, the engine of the Texas economy, over the long-term as we face a shrinking water supply, a growing population and rising summer temperatures.  The ongoing drought puts Texas’ power plants at risk, threatening a return of the rolling blackouts caused by extreme winter conditions we experienced in 2011. State Climatologist and Governor Rick Perry appointee, John Nielsen-Gammon states, “Statistically, we are more likely to see a third year of drought.”  In recent testimony, Nielsen-Gammon reaffirmed that if the drought continued through this year, this drought is likely to be the second worst episode of drought in Texas’ history.

The solutions are out there in the form of customer, or demand-side resources, like energy saving demand response (DR) initiatives (which allow customers to voluntarily reduce peak electricity use and received a payment for doing so in response to a signal from their utilities), energy efficiency programs and increasing renewable energy sources like solar and wind power, all of which consume almost no water and can be built faster than gas and coal plants. This report provides an overview of these issues and concludes with legislative recommendations that will help meet future energy needs while providing direct benefits to customers and reducing water usage.

As economic growth continues to surge in Texas, state leadership must ensure a stable and secure supply of electrical power to businesses large and small, homeowners, hospitals and schools, among others. This challenge is critical in the face of a worsening drought, population growth and the failure by the PUC to take meaningful action after almost two years of deliberation. In the final months of the 83rd Legislative Session, lawmakers have an opportunity to directly address the Energy Crunch through several pieces of legislation that would help reduce customer energy bills, lower water consumption and increase business opportunities in Texas, while also reducing peak electric demand throughout the state.

Several of these opportunities have been identified by the PUC, but a lack of clear direction from Commissioners has left businesses hesitant to engage directly in the Texas market without a good understanding of the long-term outlook.  By providing the PUC with strong guidance on issues like demand response, innovative clean energy financing mechanisms and fair payment for locally generated electricity, the Legislature can help reduce the threat of extremely costly rolling blackouts across the state.

We cannot solve this problem with the same thinking that got us here. Technology has changed our lives and the energy industry over the past few years alone, creating new opportunities for innovation. Now the state needs to be smarter about the way energy is used, and it starts with using technology to better manage our electric grid. This includes taking advantage of market-based solutions such as demand response (DR), energy efficiency programs and the continued growth of renewable energy into a smart grid.

In our report, EDF details legislation that is currently being considered by several Texas House and Senate Committees to help meet future energy needs while providing direct benefits to customers and reducing water usage.  The list includes bills that allow all customer classes to participate in electric markets, provide innovative clean energy financing mechanisms and offer fair compensation for customers who provide power back to the electric grid by generating excess electricity from renewables or conserving energy using demand response initiatives.  The Energy Crunch hasn’t ended by a long shot.  Forecasts continue to show that we won’t have the level of reserves needed this summer to ensure reliability –particularly if the summer looks anything like 2011.  Similarly, EDF will continue to engage in the issue both on our Texas Energy Crunch website and through the discussions going on at ERCOT, the PUC and the Texas Legislature.

Stayed tuned as we continue to develop innovative, market-based environmental and economic approaches that seek to keep the lights on and benefit customers.