In all of Texas government, there are few lists as consequential for everyday Texans as the PUC’s set of priorities. How the commissioners spend their time — and Texans’ money — will partially determine how much we pay for electricity and whether we’ll have power during life-threatening heat and cold.
A recent filing gives us some insight into how commissioners plan to spend the hectic upcoming year. Staff has laid out legislative deadlines and agency priorities through the end of 2024; it includes utility resilience plans, changes to the way reliability is defined, the creation of a new backup reserve service, continued electric market reforms, and more.
But it’s also critical to look at what’s not on the list. Three factors contribute most to rolling outages: extremely high demand, high gas and coal plant outages, and low clean energy output. If it’s just two of those, Texas is probably fine; if it’s all three, watch out.
Of the three, the easiest, cheapest solutions, by far, work to reduce demand or make it more flexible when energy is tight. A new report from the American Council for an Energy Efficient Economy (ACEEE) shows that building on existing programs, the PUC could reduce summer demand by 10-20% and winter demand by as much as 20-30%.
But the PUC has done barely anything al all to tap into them. And even though electricity keeps getting tight in Texas — ERCOT issued a conservation call on Thursday and another on Sunday, and a third is likely to come later today — major demand-side policy is still not on the agenda.
There are large amounts of electricity load that can expand or contract, depending on the availability and cost of power. Think of all the pool pumps, electric hot water heaters, and electric vehicles in Texas: it generally doesn’t matter when they draw power. Yet right now, there is no financial incentive or price signal to discourage people from pumping, heating, or charging when electricity is most scarce.
The PUC could change this. But it’s not on their list.
Price responsive demand solves another problem, too: it puts money back in the pockets of Texans. CPS Energy CEO Rudy Garza told Utility Dive last week: “Our customers sign contracts through our demand response program. We pay them what the market price is for power like we would when we go out and buy power in the market.” The market price on Thursday, August 17 was at or near $5 per kilowatt hour (normally 12-13 cents) for several hours. Customers who participated in demand response programs could have made around $50 dollars in one day.
Customers with well insulated homes that pre-cool could make that much or more. As I told Claire Hao from the Houston Chronicle: "If those programs are set up well, you're not one degree warmer in your home than you ever want it to be.” Of course, this does require participants to have well-insulated homes; energy efficiency is also not on the PUC’s list of priorities despite a recent report
So what will they spend their time on?
Below are quick descriptions of the items that have hard legislative deadlines, pulled from this staff filing:
· By December 10, 2023, the PUC must adopt a rule incorporating utility resilience plans. The draft rule — written by the utilities — includes some important work (e.g. tree trimming) but does not even include a mention of increasing resilience through energy efficiency or distributed energy resources like solar and storage.
· By January 30, 2024, the PUC must direct ERCOT to develop a transmission-focused reliability plan for the Permian Basin. ERCOT must develop plans for other regions without sufficient transmission capacity, too.
· By February 28, 2024, the PUC must adopt a rule increasing transmission costs for certain renewable developments.
· By June 1, 2024 — if the people of Texas approve Proposition 7 on November 7, 2023 — the PUC will have to quickly enact rules and regulations to effectively become a bank. They will make 3% loans for risky, large power plant developments. The Legislature did not allocate additional funding for staff for this monumental set of tasks.
· By September 1, 2024, Utilities must submit, and the PUCT must review, circuit segmentation studies detailing how rolling outages would be executed if required.
· By December 1, 2024, ERCOT must implement the Dispatchable Reliability Reserve Service, a new ancillary service, or back up reserve program.
As you can see, that’s a lot. And that isn’t close to everything on electricity; Commission staff and Commissioners have to implement water and telecom requirements, too. The PUC is under-staffed and under-resourced. That’s not an academic problem: the legislature keeps giving the agency work — very little of which is meant to address the state’s root energy challenges — but not enough resources to do it.
That means big solutions like energy efficiency and demand response, so desperately needed to increase grid reliability and lower costs, will be hard — but not impossible — to advance. The PUCT needs to make a big investment as soon as possible in demand-side programs that protect and benefit Texans. Such programs can start working when expensive new power plants are still on the drawing board, bringing immediate reliability and cost benefits.
Could there be a higher priority than that?