Electric Bills Likely to Rise Under ERCOT Revamp Plan Approved by PUC
AUSTIN — Changes are coming to the Texas electricity market, but after months of debate it’s still unclear how much the new plan will cost consumers.
After the deadly winter storm in February 2021 that left millions in the state without power — some for days — the Legislature tasked the Public Utilities Commission with redesigning parts of the state's electricity market. After nearly two years of debate, on Thursday the PUC approved what is called a Performance Credit Mechanism model that gives power generators a credit for being available when reserve power margins are lowest. Retail electricity providers such as Reliant and TXU, as well as cooperatives and municipal utilities, would pay for those credits.
Those power retailers, however, are likely to pass the added costs on to consumers, and the plan passed by the PUC doesn’t directly address if or how those costs can show up on residents’ utility bills. One thing is certain: it could take two to four years before the plan comes to fruition, so consumers are unlikely to see the impact of the reliability scheme for some time.
“Texas will be faced with more years of uncertainty as to service and cost of electricity,” said Ed Hirs, an energy fellow at University of Houston, “apart from their bills absolutely increasing.”
Hirs said the approved PCM plan is more aspirational than concrete and doesn’t address things such as how the state’s growing population will increase power demand.
The plan was supported by generators of electricity that use fossil fuels to make power, as well as Gov. Greg Abbott and his appointed chairman to the PUC, Peter Lake. Among other things, they argue the plan is the best way to incentivize the creation of additional thermal power plants.
Lake argued specifically the plan would shift risk and some costs away from power generators and to companies that sell Texans power.
“I think this brings more accountability to the load-side (electric retail providers) by establishing a requirement that they have to buy, through the credit system, the commodity for the product you sell to your customers,” Lake said during Thursday’s meeting.
Even though the PUC unanimously voted to adopt the plan, some commissioners still expressed concern it could increase consumer costs.
Commissioner Lori Cobos said when the market was redesigned back in the late 1990s it placed risk with the power generators, and this plan could flip that.
“Now we're transferring some of that risk to the consumer through the load serving entities (electric retail providers), to shoulder some of that risk,” Cobos said.