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Sweeping bill to address Texas power grid failures heads to Gov. Abbott's desk

Madlin Mekelburg
Austin American-Statesman
Rep. Chris Paddie, R-Marshall, was a sponsor of Senate Bill 3, sweeping legislation that aims to shore up the state's electric supply system.

A bill to shore up Texas' electric supply system is headed to Gov. Greg Abbott’s desk after state lawmakers agreed on changes to the reform measure written in response to February’s deadly winter storms and statewide power outages. 

Senate Bill 3 calls for certain electric generation providers to prepare infrastructure and operations for weather emergencies or face fines. It also requires regulators to produce various reports and recommendations on reliability and to develop strategies for implementing rolling blackouts.

A statewide emergency alert system also would be established by the bill, serving as a notification to Texas residents in the event of future power outages.

"This bill offers significant reforms that will strengthen communication, coordination, oversight, and reliability and resiliency of the ERCOT grid," said Sen. Charles Schwertner, R- Georgetown, author of the bill. "These reforms are necessary to ensure the problems during the Valentine's Day winter storm never occur again."

The House voted unanimously to adopt the final version of the legislation Sunday evening, and all but one senator voted for the bill.

More:Texas House passes sweeping legislation that seeks to fix power grid failures

Weather preparedness

The final version of the bill maintains changes made in the House when it comes to weatherization measures required at natural gas facilities and elsewhere.

While all other power generators that sell electricity in the Texas market will be required to comply with weather emergency preparedness standards determined by the Public Utility Commission under the bill, only some natural gas facilities would be required to weatherize: those deemed critical infrastructure necessary to maintain electricity service.

The Texas Railroad Commission, the state's oil and gas regulatory agency, would be responsible for determining the weather preparedness standards for these qualifying facilities.

Violators could face penalties of up to $1 million a day.

More:Facing questions after 2021 power crisis, Texas natural gas industry opposes new protective measures

Those facilities will be identified by a newly formed Electricity Supply Chain Mapping Committee, which the legislation tasks with mapping the state’s supply chain and naming critical infrastructure sources. The committee must complete its initial mapping by January.

Republican Rep. Chris Paddie of Marshall, a bill sponsor, said these requirements will help improve communication.

"We know that there were tremendous communication failures throughout the system," he said. "I feel like we've gone a long way towards being able to address those things through some of the creation and formalization of who should be at the table in the planning and also working on the mapping of critical infrastructure."

Rolling blackouts

The bill also tasks various state regulators and electric utilities with determining how rolling blackouts should occur during a future energy emergency. This load shedding happens when demand for electricity approaches supply, and electric providers shut down power supply to some customers to reduce the overall strain on the grid.

In February, major power generators began failing in rapid succession, and the Electric Reliability Council of Texas ordered rolling blackouts to protect the grid. Instead, millions of Texans were left without power for days.

Another change in the House's version of the bill remained in the final version of the proposal: The removal of language that required renewable energy sources such as wind and solar to pay for ancillary services and replacement power, which are charges for reserve power supply. Currently, consumers foot the bill for those costs.

Despite the bill's nearly unanimous support at the Capitol, some have argued that it does not go far enough to prevent outages. Rep. Jon Rosenthal, D-Houston, said he voted in favor of the bill but thinks it gives too much authority to state agencies.

“I voted for this bill because there is a lot of good in it,” he said in a tweet. “But make no mistake — this bill is not enough to ensure that we won’t have another massive blackout. It leaves much discretion to RRC/PUC/ERCOT and the guardrails aren’t nearly tight enough.”

Pricing error

Lawmakers on Sunday also approved legislation to remedy the pricing error made by ERCOT, the state’s electric grid operator, during the power outages. The House adopted the final version of the bill by a vote of 116-18, and the Senate approved the measure 26-5 shortly before midnight, sending it to Abbott.

House Bill 4492 authorizes the Texas comptroller’s office to dip into the state’s rainy day fund and issue an $800 million loan to ERCOT to cover debts owed to it.

ERCOT dictates prices that power generators can charge to retail electric providers, and when generation was falling offline during the storm, it raised prices to the maximum level allowed to incentivize continued production for those generators still able to operate.

More:Texas Senate looks to tap rainy day fund to address ERCOT pricing error

ERCOT raised prices to the maximum $9,000 per megawatt-hour but left them at that level for 32 hours too long during the emergency and ended up overcharging wholesale electricity customers by more than $16 billion.

State leaders discussed retroactively lowering prices for the period in question, but the Public Utility Commission declined to authorize repricing, and legislation to change those prices stalled.

By authorizing a loan from the Economic Stabilization Fund, known as the rainy day fund, state lawmakers are hoping to alleviate the strain on the energy market by covering the costs of debt owed by customers nearing default on their bills.

More:ERCOT overcharged power buyers by $16 billion amid calamity, monitor says

The legislation also seeks to ease the financial burden on market participants who received huge bills during the power outages by imposing fees on all electric companies that ultimately would be paid by customers through their power bills for the next several years.

Blaming the House

The Senate version of the bill would have created a one-time means of assisting residential retail customers with their electric bills to help them recover from the "public calamity" in February, but the provision was stripped from the bill in the final compromise approved by both chambers Sunday.

Sen. Roland Gutierrez, D-San Antonio, said the change was made moments before the looming deadline to agree on a final version of the bill. 

"The House of Representatives didn't include that credit either, did they?" he said. "Last night, with five minutes left, we were told to accept what they sent us or else."

The Senate vote on HB 4492 came as mounting tensions between the Senate and House reached new levels, with Democrats in the House staging a walkout to prevent the chamber from passing a Republican priority bill rewriting the state's election laws.

Lt. Gov. Dan Patrick, who presides over the Senate, had blamed House Republican leaders for the demise of several of his other priorities, killed earlier in the week after House Democrats slowed business in the chamber to run out the clock ahead of a key deadline to pass bills. 

Speaking from the Senate floor Sunday night, Patrick said the only reason he brought the financing bill up for a vote without including "ratepayer relief" was to ensure ERCOT had liquidity to operate through the hot summer months ahead.

"We lost bills and we lost help for ratepayers because the clock ran out on the House because it was managed poorly," he said, alluding to House Speaker Dade Phelan, R-Beaumont. "That's the bottom line."

Lawmakers also approved other measures to authorize billions of dollars in bonds backed by ratepayers for natural gas utilities and electric cooperatives.

SB 3 also addresses the ERCOT pricing error by limiting to 12 hours the amount of time that the price of power can be set at the maximum level.