One of the more talked about energy bills filed in the current 88th legislative session, SB 857 and companion SJR 45 is raising lots of eyebrows. According to latest news reports, the proposed Performance Credit Mechanism could add up to $5.7 billion per year to our electric bills. Billion. Annually. Debate is heated over who really benefits from the Electric Generating Facility Fund, but the legislation provides funding in the form of loans to dispatchable power sources like natural gas, nuclear and coal-fired plants. The operative word is ‘dispatchable,’ which in layman’s terms means no renewables.
Here are the details of the legislation:
❖ Establishes the “Electric Generating Facility Fund” (ECFF – a special fund separate from the general budget, not in need of direct appropriation, used to provide loans towards the construction of electric generating and transmission facilities within ERCOT) and the “Electric Generating Facility Fund Advisory Committee (comprised of the Texas Comptroller or representative thereof; three Senators appointed by the Lieutenant Governor including the head of the finance committee and the head of the electric generation committee; and three Representatives appointed by the Lieutenant Governor including the head of the finance committee and the head of the electric generation committee.
❖ Loans may only be awarded to heat-generated electric facilities (natural gas, coal, nuclear), hydroelectric, or a wholesale interconnection facility connecting energy from the above-mentioned sources, and may cover up to 25% of total construction costs.
❖ The fund is financed through a combination of intergovernmental transfers, investment earnings, and interest earnings.
Problems Associated with SB 857
❖ SB 857 subsidizes the construction of new non-renewable generating facilities and precludes wind energy and most solar energy generating facilities.
❖ Uses budgetary gimmicks to get around Texas Spending Limit by separating it from the General Fund (does not have to meet balanced budget requirements).
❖ The subsidy towards natural gas generating facilities is counterintuitive to market rationale and would create inefficient economic outcomes. Further, natural gas is already implicitly subsidized through the non-inclusion of externalities in current market prices.
❖ The Federal Energy Regulatory Commission recommended weatherization in the aftermath of the 2021 ERCOT failure, having made no recommendation to increase dispatchable generation capacity. The ECFF would not address the reliability of the ERCOT grid during severe weather events.
Alternatives or Amendments to SB 857
❖ Expand loan eligibility to include construction of non-heat sources of energy, including photovoltaics (utility- and community-scale) and wind turbine facilities.
❖ Amend the financing structure of the bill to award loans for up to 25% of the costs of weatherizing eligible facilities.
❖ Include TCEQ (Texas Commission on Environmental Quality) representatives on the committee, and include the ECCF within the general operating budget.
What You Can Do
There are things you can do. Here are a few ideas:
❖ Prepare for the public comment period once the bill is referred to committee. The bill was referred to Senate Business and Commerce committee on March 1, 2023.
❖ Contact your representative and ask them to not support SB857. Find your local representative here.
❖ Spread awareness of SB857 to your friends, family and social media.
Citations:
Bodjona, Coboyo, et al. “The February 2021 Cold Weather Outages in Texas and the South Central United States | FERC, NERC and Regional Entity Staff Report.” Federal Energy Regulatory Commission. North American Electric Reliability Corporation, November 16, 2021. https://www.ferc.gov/media/february-2021-cold-weather-outages-texas-and-south-central-unite d-states-ferc-nerc-and. Johnson, Brad. “Dispatchable Generation Mandate, Subsidy Funds Filed in Texas Legislature.” The Texan, February 15, 2023. https://thetexan.news/dispatchable-generation-mandate-subsidy-funds-filed-in-texas-legislat ure/.
Perry, Charles. “SB 857.” Texas Legislature Online. The Senate of Texas, February 13, 2023. https://capitol.texas.gov/BillLookup/history.aspx?LegSess=88R&Bill=SB857.