Why energy analysts think there's flaw in PUC's plan to shore up Texas power grid

Briana Conner Image
Friday, November 11, 2022
There's skepticism over plan to change Texas energy market
We're learning about a new proposal designed to protect the power grid, but there's skepticism about how effective it will be.

HOUSTON, Texas (KTRK) -- The first cold snap of the season is headed our way, but the Public Utility Commission says the grid is strong enough to deliver the heat you may need this weekend and throughout the winter.

That's because of several changes officials made immediately after the 2021 winter storm, but the commission is also looking at long-term solutions. Like everything else, it's going to cost you.

On Thursday, the PUC released its plan for a new idea called a Performance Credit Mechanism, or PCM. It will cost you an estimated $460 million per year for this new energy market.

After the power ran out during the winter storm in 2021, the legislature passed a law designed to make sure it never happens again.

The PUC released its recommended plan to ensure resources and reliability as demand grows over time. Chairman Peter Lake said a PCM will create an incentive-based market that makes providers liable for keeping the lights on.

"For the first time ever, they will actually be required to ensure they can deliver the power you're paying for. Under the PCM construct, if they don't, they'll be held accountable and penalized accordingly," he said.

Doug Lewin works in energy consulting and hosts a podcast called the Texas Power Podcast, and said, "This is new. This is not something other markets use."

The PCM is untested in a couple of different ways, and he said that could be a flaw in PUC's plan to shore up the grid.

"If you're trying to change a system and design a market where you won't have a failure like happened during the winter storm, you'd think they'd have to include that in the modeling, but they didn't," Lewin said.

The extreme cold was not taken into consideration, but PUC's chairman stands by their plan.

"By implementing these reforms, we can deliver a 10-times improvement in reliability for little to no additional cost for our customers," Lake said.

"It's hard for anybody to say the cost would be X or Y. I can't even sit here and say I think it would be billions of dollars more because I don't know. Nobody's actually modeled that. That's a huge limitation of the study as it was done, in my view," Lewin said.

The PUC is open to viewpoints, criticisms, and suggestions from industry experts and the public on its website. That will be taken into consideration and evaluated before a final plan is presented to the legislature in January. Implementation is at least three years away.

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