SB 388: One More Government Handout That Won’t Help
Winter Storm Uri in February 2021 revealed to Texas lawmakers, indeed every Texan, that the Texas electric grid had a dispatchable energy problem. There wasn’t enough, and if the state continued to grow, that shortage would only increase.
During the 2023 legislative session, two years later, then-PUC Chairman Peter Lake floated the concept of a Performance Credit Mechanism (PCM). In essence, the PCM would create a secondary revenue source for old-but-still-needed gas plants as well as provide a stimulus to encourage new natural gas plant construction in the state. To qualify for this secondary revenue source, these generators had to be running during the state’s most critical grid periods, Lake said. Generators would have to earn their money.
Lake faced swift and harsh criticism, including by Texas Consumer Association. The belief was that it would be an expensive, complicated system without delivering real results.
But TCA did a little more research and discovered that PCM was actually the most cost-effective solution to the problems that plagued Texas. While TCA was willing to admit its mistake, Texas lawmakers have been less inclined. PCM is still largely derided in the Pink Building and was mothballed as an option to redesign the wholesale market.
Which makes SB 388 all the more puzzling.
The bill doesn’t resurrect the PCM, but it does create a new Dispatchable Energy Credit, which creates a secondary revenue source for new natural gas plants. When asked if this plan was similar to the PCM the bill’s author, Sen. Phil King (R-Weatherford), firmly stated it was completely different. So, we did a quick check and this is what we found:
So it’s just like PCM in raising costs and requiring a targeted group of ERCOT market participants to buy credits. But unlike PCM, it penalizes wind and solar along with batteries. It also doesn’t require the generators to do any actual work to get paid.
SB 388 passed out of the Senate Business and Commerce Committee on March 11. Interestingly, during its relatively short time in the committee, not a single company testified in support of the bill. When the government is creating new cash handouts, one would think there would be at least someone willing to testify for it.
SB 388 will raise customer bills and won’t improve the grid. It needs to go away and never come back.
Sandra Haverlah is President of Texas Consumer Association, a 501c(4) non-profit organization that has been representing individuals and small businesses on pocketbook issues for over 50 years. www.texasconsumer.org