It’s Finally Over

The Legislature has concluded its biennial 140-day sprint, rejecting proposals that would have kneecapped the Texas economy

As the saying usually attributed to Gideon Tucker goes: No man's life, liberty, or property are safe while the legislature is in session.

Neither are energy consumers.

On energy, the biggest story is what policymakers didn’t do: they did not pass Senate Bills 388, 715, or 819, or House Bill 3356. Texas will be able to add new sources of energy to accelerate economic growth, strengthen the grid, and reduce costs and blackout risks — each of those bills would have impeded all of that.

They died because a bipartisan, bicameral group of legislators chose pragmatism over ideology. That’s a major relief for the wide range of businesses and consumer groups who opposed legislation that would have made power less reliable and more expensive.

Of course, that success won’t mean much unless the U.S. Senate fixes the mess of a budget reconciliation bill that the U.S. House of Representatives passed a few weeks ago, but more on that later.

For now, here’s a snapshot of what the legislature passed and what it didn’t, some takeaways from those decisions, and a look at what needs to come next:

The Texas Energy Fund is fully funded

The TEF got its second $5 billion, after receiving $5 billion in 2023. This means there will finally be $1.8 billion for the Texas Backup Power Package Program, which will incentivize gas-solar-storage hybrid systems at critical facilities. Most of the rest of this year’s $5 billion, and all of last session’s funding, has been earmarked for low-interest loans to gas plants (eight of which have fallen out of the program, mostly due to developers’ economic considerations and supply issues constraining gas turbine availability).

Extreme weather events such as last summer’s Hurricane Beryl have shown how important gas-solar-storage hybrid systems and other distributed energy resources are — Beryl alone produced prolonged outages at critical facilities including hospitals and nursing homes. Efforts like the Backup Power Package Program will help.

Large load bill a mixed bag

Senate Bill 6 started with a bang and ended with a whimper.

When the bill was filed, it included a minimum transmission charge, a change that large loads of all kinds vigorously opposed. It ended with a modest $100,000 fee on interconnection studies and some reporting requirements meant to weed out unserious projects and bring ERCOT’s eye-popping load projections down a bit.

As reported here, provisions to incentivize load flexibility among big energy consumers were included in the bill at one point, but they came out on the House floor.

S.B. 6 does still create a new large-load demand response program (24-hour notice, current programs are 10- and 30-minutes) and gives ERCOT the ability to shut off new large loads during load-shed events. The rulemaking around those provisions will be difficult and contentious.

Speaking of difficult, contentious rulemakings, the Legislature also instructed the PUC to study and probably change the method of allocating transmission costs known as Four Coincident Peak, or 4CP. Stay tuned on that one.

Progress on establishing a framework to reduce energy waste

House Bill 5323 tasked the PUC to look for strategies to reduce energy waste — specifically in ways that improve grid reliability. Energy waste increases with extreme heat and extreme cold, which radically increases the likelihood of energy emergencies or rolling outages.

The Texas Energy Waste Advisory Council will meet quarterly to develop strategies and recommendations to bolster the grid by reducing waste.

More good news: the legislature refused to reward substandard work by utilities to reduce energy waste. Senate Bill 2994 would have set utilities’ energy savings targets at a very low level, and it would have substantially increased their bonuses for hitting those poor targets. S.B. 2994 actually passed the Senate and House committee, but it never appeared on a House Floor calendar. I’ll have MUCH more to say on this in future newsletters.

Utility reform never had a chance

But despite their failure on S.B. 2994, utilities had a good session. They always do.

After Hurricane Beryl, there was a lot of discussion about changing the way utilities make their profits, aligning their incentives with what consumers want and need. Unsurprisingly, that didn’t happen: legislation that would have required utilities to hit certain performance standards, especially if they sought to increase rates on consumers, never made it out of the starting blocks.

The impact of that failure will be clear this year or next when Oncor opens a rate case seeking a big increase in rate base and profits, none of it explicitly tied to performance on reliability or affordability metrics.

The one bright spot: the utilities worked hard to pass H.B. 2868, which would have allowed them to set their own debt-to-equity ratio, a massive change that would have greatly increased their profits. Somehow, that got 110 votes on the House floor. The Senate, to its credit, never even heard the bill.

Texas Advanced Nuclear Fund established

Literally as I was recording a podcast with nuclear start-up Natura Resource’s CEO Doug Robison, House Bill 14 was filed. We talked that day about a potentially $2 billion fund to incentivize nuclear plant construction and innovation.

Within weeks, lawmakers reduced that target to $750 million. In the final budget, it’s a mere $350 million. If $350 million seems small, and it does, that says a lot about how expensive a nuclear buildout will ultimately be.

H.B. 14 does create an Advanced Nuclear Office — a single point of contact for nuclear developers and big buyers who want to incentivize nuclear power. While a few hundred million won’t make a big difference, it’s meaningful that Texas is laying out the welcome mat and setting up support structures for nuclear workforce programs, siting guidelines, and incentives. H.B. 14 didn’t go nearly as far as the Governor’s Nuclear Task Force wanted, but it’s still a decisive step toward Texas leadership in advanced nuclear power.

Paving the way for DERs with permitting reforms

Two bills — SB 1202 and SB 1252 — on the Governor’s desk would streamline the permitting process for distributed generation, including distributed batteries. That’s a big deal for affordability and reliability.

The cost of batteries has fallen 90% over the last decade, including a 20% drop in 2024. Companies like Base Power, Tesla, Sonnen, and many more are working to serve this market need, especially in the retail electric market. But local regulations often slow down installations by weeks or even months; these bills will prevent those needless delays.

In coming weeks, we’ll continue to unpack what passed and what didn’t. Let me know what you think, particularly about other bills that may have flown under the radar during the session.

Thank you for reading. This is a reader-supported publication. If you’re already a paid subscriber, thank you. If you’re not, please become one today. And please share and recommend the newsletter and podcast to friends and colleagues. Thanks again.