Thread by @douglewinenergy

Big day at #txlege today. Hearing in Senate B&C focused on fixing the grid, proposed ERCOT market changes and in Sen Natural Resources on economic development programs (incl. for energy) and implementation of a bill that bans state investment in sustainable investors #txlege 1/🧵

Here's the first part of the agenda in Senate B&C. Mostly usual suspects. None of the panels will have represention for residential consumers, community groups, renewable energy, battery storage, academia, etc. #txlege #txenergy

You can see the hearings here:

senate.texas.gov/av-live.php

@Menendez4Texas asks about the @FERC report that says in an extreme circumstances like Uri, ERCOT would be 18GW short. ERCOT CEO Pablo Vegas responds "In the most extreme cases there is a risk...there could be a gap."

Yep. No guarantees folks. Be prepared. #txlege

Chair Lake says FERC assumed we would use 80+GW and that's unreasonable.

First of all, a team of researchers at A&M led by @AndrewDessler estimated we used 82GW during Uri.

And even if we only needed 75GW, we'd still be far short according to @FERC. #txlege

Here's the A&M study by Dessler:
researchgate.net/publication/35…

Here's the @FERC report:
ferc.gov/news-events/ne…

CEO Pablo Vegas, in his intro, mentions that they are staggering planned maintenance. Note, there are 20.8GW of thermal generation offline right now. Would be good to get a better explanation of exactly how they're staggering those outages.
ercot.com/mp/data-produc…
#txenergy

There is some discussion about what has been done to improve the grid and it's not nothing: A new transmission line approved to South Texas (a big deal), a pilot for Virtual Power Plants (small solar & batteries mostly), increase in ORDC (scarcity pricing), lower price cap...

Sen @DonnaCampbellTX emphasized the need to preserve the competitive market. Chair Lake says the new system he's proposing would preserve it and "guarantee" new resources. A wide range of stakeholders will likely disagree with both of those assertions (comments due 12/15) #txlege

Chair @DrSchwertner says he's talked to a lot of generators and none of them say anything that's proposed will "guarantee" they'll build.

Lots of dicussion about needing more dispatchable generation. Senator @loiskolkhorst says it seems "the loser is always the consumer..."

Sen Kolkhorst says all this is getting expensive.

Chair Lake says the changes proposed would "reduce cost." That is demonstrably false according to the @PUCTX's own consultant. They say $460m/yr increase. If you exclude renewables, they say that would cause costs to go up.

Sen @loiskolkhorst is worried about where components of renewable energy come from. Note that the #InflationReductionAct requires components to be made in the USA to qualify for credits. Should be a big boon to manufacturing in Texas and the US. Already has been...

@Menendez4Texas asks about #energyefficiency. Says we need to think about Texans on fixed income. (Note the article from @dallasnews that 45% of Texans choose between food, medicine, and energy.)

Wants to know if anything has been done to increase EE.

dallasnews.com/business/energ…

Chair Lake says Commissioner @KJackson_TX is focused on #energyefficiency. Exec Director Gleeson says the PUCT focus on EE has been narrow, she will expand it. Says there is an exceptional item budget request to #txlege to focus on EE and #demandresponse.

Senator Menendez says @ACEEEdc study showed we could reduce demand by 8GW through #energyefficiency. Remember, FERC said we could be 18GW short. EE won't solve the whole problem but it'll solve a big chunk and in a way that puts money into Texans' pockets thru lower bills #txlege

Here's that @ACEEEdc report. #energytwitter #txenergy
aceee.org/white-paper/20…

@PUCTX Director Gleeson talked about the Office of Public Engagement PUC recently set up. This is a great first step but it's ONLY a first step. They need to be doing proactive outreach. Educational events. Listening sessions.
puc.texas.gov/agency/about/o…
#txlege #txenergy

Chair @DrSchwertner references SB3 and says he's not sure from the various proposals that new generation will be built. Intimates that existing generation and generators would benefit most and notes large share buybacks of big generators in Texas. Whoo boy. #txlege #energytwitter

Obviously the implication here is that @nrgenergy and other generators have been buying back shares anticipating a huge payday from @PUCTX action. An analysis for @TXConsumer by ICF esimated that $8.5b of increased system costs would likely go straight to generators' bottom line

Here's more on @nrgenergy's buybacks: bizjournals.com/houston/news/2…

Chair Lake admits that in the @ethree_inc modeling they excluded a Winter Storm Uri analysis. They assumed that there would not be as high an outage rate on power plants bc of market reforms. Again, @FERC estimates we'd be close to the '21 rate *this winter* in a Uri-like event.

And E3 also excluded fuel limitations: "The availability of fuel for thermal resources is not considered in this analysis; all thermal resources are assumed to have unlimited access to fuel when needed. The potential for fuel limitations is beyond the scope of this analysis"

@DrSchwertner asks if E3 is there. Chair Lake says they weren't able to come. Chair Schwertner asks how much they were paid. Lake does not answer.

(It was $614,000.)

Schwertner says he heard they were "conflicted about other clients" and that's why they didn't come. #txlege

Sen @DonnaCampbellTX says it's bad form that E3 is not there. We paid them a lot.

She says based on E3 analysis, our energy only market is reliable. She's right. The analysis does say current state is .03 LOLE, well better than the industry standard of .1)
#txlege

She says that to make the energy only market look bad, they removed 11,000MW. But if you only took out a fraction of that, energy only market looks fine.

She's right.

I wrote about it here:
renewableenergyworld.com/solar/texas-gr…

Sen Menendez asks about the excusion of fuel availabiliy in the E3 study. Here's the quote from the study: "The availability of fuel for thermal resources is not considered in this analysis; all thermal resources are assumed to have unlimited access to fuel when needed. (cont)

"The potential for fuel limitations is beyond the scope of this analysis."

Really unbelievable that fuel limitation was excluded. As if all the problems from Uri were solved. Magical thinking. Or delusional.
#txlege

Sen @NathanForTexas wants to know how long it would take to implement. Report says 3-4 years.

Chair Schwertner wants to know if generators will build. Lake says you can ask them. He says they won't be there unfortunately.

Interesting, did thermal generaors decline to testify?

Chair Lake makes clear that he will work to exclude wind and solar from Performance Credit Mechanism, even though @ethree_inc put forward the idea as technology neutral. Remarkably, they said in the report "a subset of Commissioners" wanted to do exclude renewables.

Chair Lake goes on to say PCM will be technology neutral...

But it will exclude wind and solar.

Trying to have it both ways.
#txlege #txenergy

Chair Schwertner says he's worried about the "complexity of the credits. Says it sounds like carbon credits to him. Other Senators audibly agree.

E3 did cite complexity as a problem with Performance Credit Mechanisms, along with long lead time and cost. #txlege #energytwitter

@DrSchwertner says it will take two years to make the rules for PCM. Chair Lake says "Yes sir."

Schwertner asks what do we do for the next several years? The BRS?

Lake agrees that BRS is the quickest to implement.
#txlege

Lake points them to a slide that shows wide band of possible costs and says there's a chance of a $70 billion year with some market structures.

You know what provides protection against really high demand and high prices?

Energy efficiency!
#txlege #txenergy

Sen @Menendez4Texas makes this point. Lake says most of the benefits come from codes, out of their purview. Actually, codes are one important but small piece of efficiency programs.

Menendez notes inefficient heating. Yes!

@FERC included addressing that in its recommendations

Lake again points out that Cmsr Jackson is leading efforts on #energyefficiency. This is great but note that *nothing* has been done to increase EE even 21 months after Uri. A lot of time has been wasted. The PUC can pass a rule to increase EE programs any time. #energytwitter

PUC has the authority to increase energy efficiency as the @PUCTX did in 2010 without #txlege direction to do so.

The state's goals are 80% below the *average* state with a goal and the goals have not been changed in over a decade. #energytwitter

Sen @DonnaCampbellTX says PCM will "pay high dollar for what we already have... I don't think there's any guarantee we get new builds. I think this plan is convoluted with a long timeline...it's not equitable. I think it will be costly. And the loser is the end user." #txlege

Sen Campbell thinks the study is flawed. "Not convinced at all it's a great study." She says she's leaning toward the BRS.

She says we have a robust competitive energy market. That part hasn't failed. Let's enhance what we have. Don't reinvent the wheel, strengthen the wheel.

Lake says BRS is a capacity market. Sort of, like ancillaries are but E3 wrote:

"The BRS design constitutes the smallest change to the existing market framework by largely preserving the current energy-only market dynamic..."

PCM is far more of a capacity market.
#txlege

The Independent Market Monitor believes that the LOLE for 2026 used by @ethree_inc was incorrect and that caused problems throughout the report.

Hear, hear. #txlege

IMM emphasizes that loss of load expectation today is .03 (buried on p. 126), well below the .1 they're shooting for. The only way the energy-only market looked so bad was by artificially removing 11GW. She says LOLE in 2026 is too high bc they didn't model ORDC curve dynamic...

In response to question from @NathanForTexas she says the more solar you have, the higher the ORDC (scarcity pricing adders) will be (bc of hour ahead uncertainty). They didn't model that.

Very interesting. She notes that the extra revenue will mostly go to thermal generation.

IMM says 2nd problem is retirement. They assumed that if revenue did not equal cost of new entry (CONE), you'd retire. She says that's inaccurate. Generators will make their own decisions based on costs.

Johnson: They accelerated the retirements right?

Bivens: That's correct.

She cautions against using the "5,630MW" number which appears throughout the report as what needs to be replaced. She "thinks that's overstated."

Johnson asks about excluding storage from net peak load. she says yes, that's unusual and should not be excluded.

Sen @NathanForTexas says how did BRS change from something that would include only older plants to something now with newer plants.

She agrees that it was defined and modeled strangely in the E3 report.
#energytwitter #txlege

Sen Johnson says he's never seen a time when so many experts disagree. Says our point now isn't to pick something but to learn more and discuss.

Long way to go pick something...
#txlege

Sen @Menendez4Texas asks about costs of shifting Minimum Contingency Level and Operating Reserve Demand Curve.

IMM says those costs were $1b and $2b respectively... through July.
#txlege

ercot.com/files/docs/202…

Sen @loiskolkhorst asks about uncertainty with solar she was talking about.

IMM says the biggest four uncertainties are:
-Thermal outages
-Demand
-Wind and solar production

(I think fuel availability should be added to the list, btw).

Sen Kolkhorst reiterates this will all come back to the consumer and they need to keep consumers in mind.

I agree and #txlege will have a $25b surplus. They could do a lot to help consumers AND strengthen reliability by funding energy efficiency!
#txenergy

The next panel is with manufacturers, co-ops, @AECT, and retailers, none of whom seem to support PCM, at least there aren't any clear statements of support. All seem to agree more analysis and a technical conference with @ethree_inc is needed.
#txlege

Katie Coleman representing Tx Assn of Manufacturers shares concerns of IMM about the assumptions in the E3 report. Also notes that the current system, according to E3, is very reliable:
#txenergy

From p. 46 of the @ethree_inc report: "Without further adjustments to the resource mix beyond CDR additions and retirements, the “pre-equilibrium” 2026 portfolio would achieve an LOLE of 0.02 days per year, more reliable than the common industry benchmark of 0.1 days per year."

In other words, as I wrote about in the article below, you have to juke the stats to make the system look really bad, which E3, perhaps under the direction of the PUCT, did.

Not to say there aren't problems, there are, but not of capacity...
renewableenergyworld.com/solar/texas-gr…

Coleman: "It's not a capacity problem it's an operational problem." Yep. She says she appreciates the changes they're trying to make to other capacity market constructs. but the PCM is still a capacity market construct. Yep again.
#txenergy

She shares concerns of Senators that it will take a long time to implement PCM and that there will be no guarantee of new generation. The PUC cannot command capital. 99% of payments will go to existing generation. If there's not enough, customers will end up paying the penalty.

Manufacturers support something like an uncertainty product like what the IMM favors.

Need better definition around this...
#energytwitter

In response to @Menendez4Texas, @katiecolemack says residential #demandresponse is one of the most important parts of competitive electric markets. Asked about #energyefficiency, she says given how peaks are driven by residential HVAC it's an important solution. #txlege

@NathanForTexas asks Cathy Webking representing retail electric providers how they can get more residential #demandresponse. She cites the ADER pilot (more at the link on that) & the utility #energyefficiency programs as avenues to increase it.
renewableenergyworld.com/solar/resident… #txlege

Tom Oney @LCRA says they would probably favor PCM. Katie Coleman representing manufacturers says of course they do, "they're an incumbent generator." It's a "mandated wealth transfer" from customers to generators.

Yep.
#energytwitter #txlege

Sen @loiskolkhorst says she agrees about a "wealth transfer," seems also to not like the PCM.

She also says "we'd all agree" renewables are the most heavily subsidized energy source.

Not necessarily. To name just one of dozens, intangible drilling costs (IDC) is a subsidy for oil & gas that equals roughly "60-80% of total drilling costs" #txenergy
crfb.org/blogs/tax-brea…

The final panel deals with #transmission. @PUCTX director says they will take up the rule to implement #SB1281 which could establish an economic test to get more transmission built. Currently, reliability is usually the only consideration. Rule to be considered Nov. 30. #txlege

Gleeson also notes they'll deliver a study to #txlege next month on the benefits and costs of interconnecting to Eastern and Wester grids. They took comments on that last month.
#txlege #txenergy

Also considered in the #SB1281 transmission rulemaking is a potential resiliency standard. Sen @NathanForTexas asks what the difference between reliability and resiliency is. Woody Rickerson says reliability is defined by NERC. Resiliency would be above that.

Sen Johnson wants to know if further segmentation of the distribution grid would have helped us roll outages in Uri, or in some future Uri-like situation. ERCOT's Rickerson says yes, but they don't talk to utilities about that. They only look at transmission level.

Sen @NathanForTexas asks if #DERs would help reliabillity. Rickerson says yes and that they can be aggregated to be treated just like generation resources.
#energytwitter #txlege #txenergy

They are now moving on to a discussion about electric vehicles with @TxDOT @AEPnews & @ERCOT_ISO.

Darran Anderson w/ TxDOT goes first. Starts w/ #IIJA National EV Infrastructure formula funding. Texas received $60m w/ another $80m coming. #txlege #EVs
txdot.gov/projects/proje…

Rickerson of @ERCOT_ISO says they model electric demand from EVs. EV charing represents .2% of all electricity this year. By 2029, they think it will be 1.25% (750k Light Duty Vehicles and 125k Medium Duty Vehicles).
#energytwitter

Adriane Jayne of @AEPTexas is giving a historical perspective about how each generation deals with new loads that weren't anticipated in the previous generation. She notes that truck fleets will be esp. challenging but is confident they can meet that demand. #EVs #txenergy

Now they're on to "Large Flexible Loads" which is usually a euphemism for crypto but actually could also apply to green hydrogen, direct air capture (DAC), EV fleets, data centers, LNG export facilities (one in TX uses ~800MW), and more. Still, today they're talking about crypto.

Rickerson of @ERCOT_ISO says they have 1.5GW of crypto load. There is 37GW under consideration in the queue. Especially after FTX fiasco, I'd bet real money (see what I did there?) developers won't build even a small fraction of that. Still, lots of other flexible loads coming...

@McNamaraMT of @Lancium talks about how bitcoin large loads are really just the first... he thinks there will be large demand soon from electric trucks, for example. He notes these large loads can be powered by renewable energy, important to many customers. #energytwitter

McNamara says, they will be able to serve those customers if the market design allows them to access those renewables. That customer choice to pick low cost and clean resources may be at risk, as we've heard earlier.
#Txlege #txenergy