Is the sky falling?

That’s what state Sen. Troy Fraser wants to know. The chairman of the Senate’s Natural Resources Committee told regulators during a meeting this week that they may be stirring up unwarranted anxiety about the risk in Texas of future blackouts.

This, in turn, has led to an aggressive and unwarranted push to subsidize generators with ratepayer money, said the lawmaker. The Public Utility Commission has been considering such subsidies for several months, and last month took a clear step toward authorizing them.

Sen. Troy Fraser

Sen. Troy Fraser

But during a committee meeting in Austin on Monday, Sen. Fraser questioned the cost of the proposals, whether they marked a step away from electric competition — and even whether regulators had the legal authority to take such action.

“You give an agency authority and sometimes they forget the Legislature is over here, and we have oversight (authority),” said Sen. Fraser, a Republican from Horseshoe Bay. “I’m a little concerned that we have that disease at the PUC right now — we have agency creep. And we have the agency moving in a direction that we may not be in the direction we intended the agency to go.”

The overarching tenor of the hearing was one of deep skepticism toward the proposed subsidies. Under the proposals, those who purchase power in Texas — typically retail electric providers — would be required to submit extra payments to power generators to encourage the construction of more power plants. The scheme would increase electricity costs, potentially by billions of dollars annually, according to several independent estimates.

Attorney Chris Brewster of the Texas Coalition for Affordable Power was among the expert witnesses who questioned whether regulators possessed the legal authority to implement the proposals. He noted that that the Public Utility Regulatory Act requires that electric services be determined by the normal forces of competition. “It is difficult to square (the PUC proposals) with this language,” he said.

Chris Brewster TCAP Expert

Chris Brewster
TCAP Expert

TCAP also released to the legislative committee a policy primer on the expensive proposals. You can find it here.

Sens. Leticia Van de Putte, D-San Antonio; Donna Campbell, R-New Braunfels; Kirk Watson, D-Austin and Rodney Ellis, D-Houston expressed similar concerns. Sen. Campbell said those calling for the subsidies had presented a “false dilemma” and that the subsidies would unduly burden consumers, including Texas military bases that already pay outsized electricity bills. Sen. Van de Putte said she wanted a breakdown of capacity market costs to individual ratepayers and large energy consumers. “I’m really concerned about how you’re building this case — we need to know who is going to pay,” she said.

State Sen. Fraser also reiterated his call for the PUC to conduct a detailed cost-benefit study before moving forward with the proposals.

What is the Texas Coalition for Affordable Power?

TCAP is a coalition of more than 160 cities and other political subdivisions that purchase electricity in the deregulated market for their own governmental use. Because high energy costs can impact municipal budgets and the ability to fund essential services, TCAP, as part of its mission, actively promotes affordable energy policies. High energy prices also place a burden on local businesses and home consumers.