Texas’ February winter weather emergency dominated energy news nationwide. Now it’s dominating proposals in the Texas legislature. Following historic electricity outages, it’s no surprise grid reliability issues have come to the forefront of lawmakers’ priority list, with proposed legislation focusing on everything from distributed energy resources to various commission reforms. We turned to AEE’s PowerSuite to parse out which bills at play in the Lone Star State are generating the most buzz and share the measures we’re keeping our eyes on.
Ahead of the state’s March 12 deadline, hundreds of bills were filed in response to the February freeze, with various measures addressing weatherization, emergency planning, wholesale markets, the Public Utility Commission of Texas (PUCT), and the Electric Reliability Council of Texas (ERCOT). In total, the legislature — which meets biennially — introduced more than 350 bills pertaining to energy policy in the state. This includes 60 measures picked up by PowerSuite’s “Resilience and Emergency Management” watchlist and 62 measures under “State Agency Reform.” In comparison, just 80 energy bills were tracked by PowerSuite during Texas’ last legislative session in 2019.
In what is emerging as the state’s top trend, Texas lawmakers appear set on making changes to ERCOT, the state’s grid manager and market operator. Proposed changes include everything from varying the number of board members to term limits, geographic representation, and appointment processes. As of April 5, one of the top “trending” bills – based on legislative activity and interest by PowerSuite users – is HB 10 (Paddie), which requires all ERCOT members to reside within the state and replaces unaffiliated members with those appointed by the Governor, Lieutenant Governor, and Speaker of the House. Sponsored by Representatives Hernandez (D) and Paddie (R), the bill also aims to restructure ERCOT’s board and would create an additional seat to represent consumer-specific interests. Another, HB 2586 (Thierry), would require an annual audit of organizations certified to manage ERCOT.
A slew of bills similarly seek to shake up the PUCT. A handful propose to transition the PUCT to an elected body, including SB 857 (Zaffirini) and HB 2691 (Slaton), while others, like HB 2562 (Pacheco), look to transfer PUCT authority to the Texas Railroad Commission. However, according to our AI-powered bill forecast, these measures, while numerous, are unlikely to be enacted.
Another set of bills look to reform the wholesale electricity market. They range from allowing distributed energy resources (SB 1479, Johnson) and demand response (HB 2820, Thierry) participation in ERCOT, to ensuring resource adequacy (HB 4378, Paddie) and allowing PUCT price intervention (HB 4512, Raymond).
Other policy responses from the state look to improve transmission planning and grid resilience. For example, HB 1607 (Darby) and companion bill SB 1325 (C. Hinojosa) would reform ERCOT transmission planning and accelerate infrastructure development. Another measure, HB 1556 (Murphy), would develop additional large scale grid storage, while other bills filed this session, such as SB 2052 (Menendez) and SB 2109 (Schwertner), look to increase demand response and transmission. HB 3038 (Goodwin) promotes the use of advanced metering infrastructure to better target critical load during rolling blackouts.
While resilience issues pose major challenges to customers and utilities alike, they also present a major opportunity for Texas to bolster its deployment of advanced energy technologies. Accordingly, several lawmakers have filed bills that span the categories of energy storage, electric vehicles (EVs), onshore wind, solar, and distributed generation. Noteworthy electric transportation bills include SB 1303 (Blanco) and HB 4120 (Deshotel), which look to electric school buses as a method of storing excess electricity that can be sold back to the grid during times of peak demand. Other EV legislation, like HB 4379 (Harris), would allow the direct to consumer sales of electric vehicles and SB 1202 (Hancock) would exempt charging station owners from being considered a public utility. Other bills are not so EV friendly - a handful look to institute significant flat annual registration fees. These include HB 427 (K. King), HB 2221 (Canales), HB 2986 (Martinez), and SB 1728 (Schwertner).
SB 398 (Menendez) and HB 3696 (Deshotel) promote distributed energy resources and create protections for solar customers, and HB 3624 promotes the development of behind the meter storage. By contrast, some legislators are more skeptical of renewable energy expansion and have filed bills to tax energy sources other than natural gas (HB 433, K.King) or generators that receive renewable energy tax incentives (SB 1993, Hughes).
SB 415 (Hancock) and its companion bill HB 1672 (Holland), key grid resilience measures, have topped PowerSuite’s trending list in the state for several weeks. Introduced before the power crisis, the bills look to incorporate battery storage into Texas’ energy grid and would give the state’s transmission and distribution utilities (TDUs) the ability to contract with power generation companies to provide electric energy from electric energy storage facilities. Energy storage emerged as the fourth most popular category among the 2021 Texas bills in PowerSuite, including legislation like SB 1331 (J. Hinojosa) and HB 4462 (G. Hinojosa). Both seek to establish storage targets as percentages of peak demand.
According to a report produced by Demand Side Analytics for Texas Advanced Energy Business Alliance (TAEBA), the state could save $5.47 billion over the next 10 years by integrating DERs onto the electricity grid. In recent years, these technologies have emerged as new ways to produce power, manage electricity demand, and provide valuable grid services. Of all the bills in play this session, TAEBA has selected a handful of priorities to bolster reliable energy. You can read more about TAEBA’s priorities here.
As the Texas legislature grapples with these consequential proposals, you can count on AEE’s PowerSuite tool to track the action. Our AEE insights team is carefully compiling the broader trends in energy and electric transportation legislation in all 50 states and will be publishing these findings soon.
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