It’s now been two years since Winter Storm Uri sank Texas into a deep freeze and brought the state’s electric grid to the brink of total collapse. Upon signing into law a series of legislative changes at the end of the 2021 session, GOP Governor Greg Abbott infamously declared mission accomplished on Texas’ response to the energy disaster. “Bottom line is that everything that needed to be done was done to fix the power grid in Texas,” he said. That line hung over his head like a political anvil as the state’s grid operator ERCOT has faced repeated close calls in the face of subsequent extreme weather, struggling to meet record-level electricity demands.
Meanwhile, the newly revamped Public Utility Commission (PUC) was—at the Lege’s behest—crafting a drastic overhaul of the state’s electricity market to ensure that the grid could reliably meet the increasing demands of a rapidly growing population. The focus of this redesign has largely been centered on the supply side of the equation—how to incentivize generators to build new natural gas power plants—while sidelining questions about how to lower consumer demand. This months-long process—led by Abbott-appointed PUC Chairman Peter Lake—came to a close in January when the Commission unanimously approved a contentious, convoluted, complicated thingamajig called the “Performance Credit Mechanism.” Only slightly less jargon-y in acronym form, the PCM would effectively deliver lucrative credits to power generators—such as energy giants Vistra and NRG—that are able to provide energy during certain high-demand periods. Electricity retailers—the utilities you pay your bills to—would pay for those credits and, naturally, pass the cost on to everyday consumers.
That policy proposal, which has never been used in the United States, received staunch resistance from the start. The PUC’s own energy consultant recommended against the policy because it “entails significant risk because of its novelty,” as did ERCOT’s independent monitor. All members of the Texas Senate business and commerce committee that oversees grid issues sent a letter to the PUC telling it to put its policymaking process on pause. Big business groups like Texas Manufacturers and the Oil & Gas Association came out against it on the grounds that it would increase their energy bill, as did consumer advocacy groups. The policy is estimated to cost at least $400 million a year to electricity customers while many experts question whether it will actually do anything to prompt new power plants.
