Since 2009, securitization has enabled electric utilities to finance significant system restoration costs at a reduced cost, benefiting ratepayers.
HB2869 aims to expand the existing program by allowing utilities within the ERCOT region to use the Texas Electric Utility System Restoration Corporation.
The bill reduces the securitization threshold from $100 million to $50 million and consolidates the cost determination and financing orders proceedings.
Securing system restoration costs is subject to conditions ensuring lower financing costs and quantifiable benefits to ratepayers.
HB2869 requires reconciliation of securitized cost estimates to ensure accuracy.
Mark Bell from the Association of Electric Companies of Texas testified in support of HB2869, highlighting consumer savings and financial health benefits for utilities.
Questions were raised regarding the types of utilities affected, clarifying that it primarily concerns large transmission and distribution utilities.
Jason Ryan from CenterPoint Energy supported the bill, emphasizing its impact on affordability and customer satisfaction.
CenterPoint Energy acknowledged past shortcomings related to storm handling and emphasized their renewed focus on customer satisfaction.
The testimony highlighted the bill's role in reducing hidden costs and improving affordability for customers following major events.
The committee left HB2869 pending with further consideration expected.
Katie Coleman from the Texas Association of Manufacturers voices opposition to a bill requiring PUC and ERCOT to evaluate theoretical economic savings over a project's first ten years.
Expresses concerns about the speculative nature of long-term gas forecasts driving economic savings tests.
Acknowledges the importance of a robust transmission system and previous support for HB5066 and projects addressing congestion, but finds the current bill too speculative.
The proposal before them was previously considered by the PUC and ERCOT but not implemented due to existing model limitations and lack of supporting tools.
Discusses the discrepancy between using public versus private funds for long-term infrastructure planning.
Dialogue with Representative Darby reveals a long-standing disagreement concerning the bill's impact on manufacturers versus residential customers.
Addressed the need for higher hurdle rates for speculative long-term investments, providing an example rate of 20%, while acknowledging its speculative nature.
Mentions other jurisdictions where longer evaluation horizons are used, though typically with a higher hurdle rate.
Notes issues like project approval delays and the resource implications for ERCOT to extend their future projection models.
Agrees that current tests account for avoided costs and reliability project deferment, indicating room for agreement on some model features.
Larry Linenschmidt spoke as an individual and a volunteer with various environmental organizations.
Highlighted that Texas is experiencing unprecedented growth, but the power grid is not keeping pace, causing increased energy costs and reliability issues.
Emphasized the vulnerability of the current system, quoting recent events of Texans being without power.
Advocated for legislation that promotes investment in modernizing and expanding transmission infrastructure.
Stressed the need for long-term planning to accommodate Texas’s rapid growth and changing energy landscape.
Mentioned that HB3069 aims to improve the planning process of ERCOT’s economic evaluation of transmission projects from a 3-year to a 10-year cost-benefit analysis.
Noted that other grid operators use a 20-year evaluation period, indicating Texas is behind industry standards.
Highlighted the importance of a robust grid for Texas's economic growth.
Dr. Joshua Rhodes is a research scientist at the University of Texas at Austin focusing on energy systems and electricity grids, particularly ERCOT.
Discussion involved the use of a 3% discount rate in a bill to protect consumers from overpaying for transmission by discounting future cost and savings projections.
Dr. Rhodes agrees that a 3% discount rate is more aligned with models predicting ERCOT's future than higher rates like 20%.
He believes the 3% rate provides significant protection against future uncertainties.
Dr. Rhodes emphasized a need for more transmission infrastructure in Texas, especially with the rise of AI data centers and other developments.
He stated that Texas is not currently on track to meet necessary infrastructure developments by 2030.
Woody Rickerson, ERCOT COO, testified neutrally on a bill and answered questions regarding transmission planning.
ERCOT has approved about two economic transmission planning projects in the last ten years.
Other grid operators use longer time frames for evaluating transmission projects, but ERCOT builds them faster, typically three to five years.
Rickerson emphasized that transmission connects generation to load, highlighting the need for efficient transmission planning.
Discussion on the impact of winter storm Uri, where transmission wasn't cited as the primary issue, but rather a generation and weatherization issue.
Speculation on future transmission needs is difficult due to uncertainty in where new generation will be built.
ERCOT conducts long-term system assessments for potential future scenarios but finds economic planning challenging beyond five years due to speculative generation.
Different views were expressed on the timeline for planning and discount factors for economic transmission line projects.
There's a challenge in balancing speculative and confirmed generation projects for planning.
Continued congestion and high consumer prices serve as market indicators, influencing generator location.
ERCOT currently uses a three-year cost comparison for planning models, considering a longer timeline is a policy decision.
Increased dispatchable generation could lead to more transmission projects being justified.
Discussion on the effectiveness of ERCOT's response to winter storm Uri and their weather preparedness strategies.
Concerns about the speculative nature of long-term models affecting investment decisions in new facilities.
The importance of knowing both load and generation locations for effective transmission planning was highlighted.
Speaker: Brent Bennett Affiliation: Texas Public Policy Foundation
Supported HB3228.
Emphasized concerns from rural landowners regarding decommissioning and disposal of wind and solar facilities.
Highlighted the expected increase in waste from wind (800,000 tons of turbine blades, 40,000,000 tons of steel) and solar (5,000,000 tons of waste) in ERCOT region.
Compared solar waste to the waste output of Austin over a 20 year period.
Mentioned existing regulations for other energy waste like coal and oil, advocating for appropriate regulations for wind and solar waste.
Urged the committee to vote favorably for HB3228.
Speaker: Judd Messer Affiliation: Advanced Power Alliance
Represented support for HB3228.
Advanced Power Alliance consists of 60 companies focused on solar, wind, and energy storage.
Referred to past support for decommissioning statutes for wind and solar.
Addressed financial liability for recyclers to prevent situations like in Sweetwater.
Highlighted industry initiatives for leading by example in sustainable practices.
Referenced upcoming Senate bill related to battery energy storage.
Proceedings:
Committee noted HB3228 is left pending for further consideration and research.
