The Texas state senate voted overwhelmingly late Wednesday to finally fix a chronic issue known to plague the ERCOT-managed power grid for well over a decade now. On a bipartisan veto-proof vote of 22-9, members approved SB 6, which would create a fund to help finance the addition of up to 10 gigawatts of new dispatchable thermal generating capacity, most likely powered by natural gas.
The bill, along with SB 7 - also passed on Wednesday on a unanimous vote - is part of Lt. Governor Dan Patrick’s priority agenda for the 2023 session of the legislature. Patrick has described SB 6 as “an insurance policy for Texas,” one designed to fix a lingering issue known to exist on the Texas grid for the last 12 years.
Republican Sen. Charles Schwertner, who chairs the Senate Business and Finance Committee and is the lead sponsor on both bills, said SB 6 “guarantees steel in the ground and low interest loans for dispatchable generators,” and added in his motion to pass the bill that it was being done “in memory of the hundreds of Texans that died and the millions of Texans that suffered.” The latter is a reference to the more than 200 Texans who died and millions who went without electricity for days when the state’s grid suffered a massive failure during 2021’s Winter Storm Uri.
The grid’s known lack of reserve generation has been allowed to linger since 2011, when a storm similar to Uri put most of the state into a deep freeze and caused rolling blackouts in February of that year. As they did in 2011 and 2021, organizations representing the state’s power generators wasted no time jumping in to oppose this latest attempt by policymakers to address the matter.
“It represents a costly tax on consumers that does not improve reliability,” said Michele Richmond, executive director of the Texas Competitive Power Advocates. “Unfortunately, it sends a clear message that Texas does not believe in the competitive market and will result in state-owned generation systemwide.”
This is inaccurate. First, the new capacity would not be “state-owned.” The program would actually ensure that adequate dispatchable thermal capacity that the members of TCPA have consciously chosen not to build despite a well-known, chronic need becomes a reality after a dozen years of inaction. The competitive market that helped create the deadly disaster of Winter Storm Uri will be free to go right along failing to ensure grid reliability.
Advocates for renewables and the climate change lobby also oppose the program on the grounds that it could crowd out the building of more renewables and increase emissions. But the bill does nothing to impact the array of incentives and subsidies for renewables that already exist. ERCOT has clearly demonstrated it already has a hard time properly managing the high volume of wind capacity that has been loaded up on the grid in recent years, and a major weakness of renewables is their failure to perform during severe weather events, which is the whole point of having an adequate reserve of dispatchable thermal capacity.
Critics of natural gas will point to the failures of gas generators during Uri, and it’s a valid point, as few of the plants were properly winterized and others had trouble sourcing fuel as wells and transportation infrastructure froze up. But SB 6 accounts for those arguments by requiring plants to be winterized and, crucially, to maintain 7 days’ supply of fuel on-site to guard against a Uri-type event.
Opponents also point to the $10 billion price tag of SB 6, represented by the fund set up to ensure low-interest financing for the projects. No doubt that is a significant amount, but it pales in comparison to the economic cost of a grid failure like that suffered during Uri.
The Texas State Comptroller’s office published a report in October, 2021 in which it said, “Although Winter Storm Uri’s devastation continues to be tallied, early estimates of the storm’s economic toll, as mentioned, range from $80 billion to $130 billion — the result of power loss, physical infrastructure damage and forgone economic opportunities.” Given that Texas historically has experienced a Uri-style winter event roughly once a decade, an investment of $10 billion during a time in which the state enjoys an unprecedented budget surplus of at least $33 billion seems more than reasonable, even wise.
So, the Texas Senate has done its job in a bipartisan, overwhelming fashion. The question now goes over to the House of Representatives, where a similar proposal in 2021 was quietly killed late in the session by the House State Affairs Committee. Whether this session’s committee members will summon the political will to do the right thing, at long last, remains to be seen.
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