BREAKING: SB 715 Likely up for Vote in Committee This Morning

Bill is retroactive, would require *existing* generators to have their own backup, would add billions in cost; ERCOT CEO Pablo Vegas two years ago called a similar proposal a "tax" on consumers

Two years ago, a few powerful policymakers, aligned with the Texas Public Policy Foundation, slipped a requirement for a study into a bill at the very end of the legislative session. They thought it would prove that renewables were making the system more expensive and thus should be required to pay for back up.

The language in House Bill 1500 required the commission to file an annual report that calculates the costs associated with “backing up dispatchable and non-dispatchable electric generation.” They thought this would be a gotcha.

Here’s the conclusion of the PUC’s report:

In other words, backup power costs have risen at about the same level of growth of supply and renewables do not add backup costs.

The PUC staff who did the analysis went on to say that “ERCOT procures ancillary services to manage a varied set of system risks including but not limited to the risk of unit trips (for all generator types)…”

Yes, the report found that thermal generators need to be backed up, too.

In the 2023 session they passed a requirement for “firming” of renewables anyway, over the objections of most market participants, only they made it prospective, beginning January 1, 2027.

Senate Bill 715 is retroactive; it requires all existing generators to have backup. This would be wildly expensive, creating thousands of mini-ERCOTs who each must procure their own reserves.

This is almost certainly illegal as hundreds of billions of dollars were invested based on the rules that were in place at the time. Now, the Senate apparently wants to move the goalposts in the middle of the competition. Lawsuits will ensue and meanwhile, few companies will want to invest in generating assets in Texas because it will be too expensive and the regulatory uncertainty will be off the charts.

Without new energy sources, the economy can’t grow.

The path the Senate is about to go down if they pass Senate Bill 715 is a dangerous one. They’re gambling with the state’s economic growth and the cost of power for consumers of all kinds. The kind of system that would ensue would require every single generating resource to have backup.

When this was considered two years ago, ERCOT CEO Pablo Vegas testified it would amount to a “tax” on consumers. It’s redundant, wasteful, duplicative, and unnecessarily expensive.

One of the major reasons to have a grid operator like ERCOT is to procure backup reserves for the system. ERCOT tried this generator self-backup system twenty years ago and it didn’t work. It was abandoned because it was inefficient, expensive, and unnecessary. Legislators need to take the time to dig into these issues.

In 2023, the legislature adopted a policy that would go into effect in 2027. To get more information, they asked the PUC to write a report giving them data on the need for said policy. The report was clear: that policy is unnecessary. The data does not support the conclusion that renewables add costs to the system. So did they move to repeal the provision? No, they are moving to make the unnecessary clause retroactive.

The committee will likely pass the bill on a party line vote this morning. Per the Senate's custom, there will likely be very little discussion even though the bill would have a massive impact.

Should this bill pass the legislature the Texas economic miracle is over and Texans’ electric bills will skyrocket.

The Senate is expected to vote on SB 715 shortly after 8:00 a.m in the Senate Business & Commerce Committee today.

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