Texas lawmakers, energy experts unsure ‘complicated’ new power grid market would work

The agency charged with overhauling Texas’ electricity market has proposed an untested structure in hopes of retaining the free-market system some blame for the blackouts during the 2021 winter storm. Texas legislators ordered the overhaul of the state’s deregulated energy market, which Public Utility Commission Chairman Peter Lake has called “crisis-based” because incentivizes power companies to provide low-cost electricity, at the risk of the grid’s reliability. The proposed “performance credit mechanism” — or PCM, as it’s known in the acronym-heavy parlance of energy insiders — offers power producers a financial reward to have their plants available during times when Texans are consuming the most energy. The model balances grid resiliency with free-market sensibilities, Lake says. With his blessing, the PUC will adopt it or another design before state lawmakers return to Austin for the legislative session that starts Jan. 10.

Lake says the PCM will encourage companies to invest in new natural gas plants, a top priority for lawmakers and energy insiders who are concerned that the ascendancy of cheap renewable energy in Texas will weaken natural gas producers. But some doubt Lake’s assertion and are scratching their heads over the model, which he said would take four years to implement. “This plan is so convoluted and has a long timeline to put in place, that it is a set up for failure for everyone,” New Braunfels Republican Sen. Donna Campbell said at a recent hearing of the Senate Committee on Business and Commerce. Senators from both parties appeared perplexed by the decision to pursue the PCM. Sen. Charles Schwertner, a Georgetown Republican who chairs the committee, questioned why the PUC should create a new, untested market mechanism to encourage companies to build new natural gas plants rather than directly providing government money as the incentive.