Energy Boost

Energy, a huge chunk of the Texas economy, is never far from the agenda at the Legislature. This year, Sunset Advisory Commission reviews of oil and gas and electricity regulators will keep the sector in the spotlight — as will renewed clamor for legislation to aid clean energy, though the latter will have to fight hard for attention against other legislative priorities in a belt-tightening and redistricting year.

Environmentalists will be eager for policies to aid solar power. Last session — which advocates dubbed the "solar session" — dozens of bills got filed to promote solar energy in various ways, but virtually none got through; key bills died amid the last-minute chubbing, a filibustering tactic. Solar types will be back for another try, and they'll be clamoring for one of two things: a mandate to aid renewable energy sources other than wind (which thrived under a mandate originally crafted in 1999) or a rebate program that would specifically benefit solar.

Either would face uphill climbs, as even advocates acknowledge. Renewables are more expensive than conventional power sources, and given the deep budget hole, proposals that require money will have to fund themselves. Anything that taps into the general fund will be a non-starter, said Land Commissioner and former state lawmaker Jerry Patterson, speaking on a clean-technology panel at the Capitol last week.

In addition, noted Christopher Hughes, an Austin-based attorney and renewable energy specialist with the Brown McCarroll law firm, the arrival of three dozen new lawmakers — few of whom ran on platforms that emphasized renewable energy — will make the fate of any legislation less predictable, so renewables advocates will need to work especially hard to make their cases. Groups like the powerful Texas Association of Manufacturers will oppose any measure that could increase electricity prices.

A mandate to aid non-wind renewables could come from regulators. On Thursday, the Public Utility Commission will consider a proposal that would set a 500-megawatt target for non-wind renewables (which would include biomass and geothermal as well as solar). This would then go for public comment but would not be adopted for several months at the earliest. The Legislature is likely to discuss similar proposals, though appetites for mandates these days seem weak. State Sen. Troy Fraser, R-Horseshoe Bay, chairman of the Senate Natural Resources Committee, plans to reintroduce legislation that would offer rebates for solar legislation (paid for by extra charges on electric bills). Another bill likely to reappear this session would prevent homeowners' associations from blocking their members from adding solar panels.

Energy efficiency is likely to be another important topic, says Erika Akpan, a policy analyst for the Senate Business and Commerce Committee, which is newly headed by state Sen. John Carona, R-Dallas. While the Public Utility Commission recently raised energy efficiency targets, lawmakers could improve the coordination of state energy-efficiency programs and expand consumer education, Akpan says.

Issues around natural gas drilling are also likely to resurface. Last session, a raft of bills — including several authored by state Rep. Lon Burnam, D-Fort Worth, and state Sen. Wendy Davis, D-Fort Worth — would have tightened regulations on gas companies operating in the Barnett Shale, the area around Fort Worth that has seen a drilling boom in recent years (though this may have slackened slightly due to low gas prices). The issues include ownership of surface rights, air pollution and the use and recycling of water by gas drillers.

"We anticipate we'll see these pieces of legislation again," says Bill Stevens, executive vice president of the Texas Alliance of Energy Producers, which represents independent oil and gas companies. Already, some have been filed, including several by Davis.

But it is the Sunset Commission's work that will get most attention given its power to recommend to the Legislature changes in the mission of a state agency (or whether it should even continue to exist). All the major agencies in the energy field will be reviewed: the Railroad Commission; the Public Utility Commission; the Electric Reliability Council of Texas, the grid operator; and the Texas Commission on Environmental Quality.

"Sunset's the big thing we're watching," says John Fainter, the president of the Association of Electric Companies of Texas.

The hottest item may be the future structure of the Railroad Commission: Will its name be changed to reflect its oil-and-gas responsibilities (and the fact that it no longer regulates railroads), and will its three-commissioner structure be altered? The staff Sunset report, released last month, recommended a new name — the Texas Oil and Gas Commission. It also advised replacing the three elected commissioners with five part-time gubernatorial appointees, a move that could save $1.2 million a year due to reduced travel and staff costs.

The Railroad Commission's lax enforcement actions, as cited by the staff report, will also come up for scrutiny. This week the Environmental Protection Agency, unusually, stepped directly onto the commission's turf when it ordered a natural-gas drilling company operating near Fort Worth to assist two homeowners who had found methane in their water. The Railroad Commission had not acted, the EPA said, so somebody had to. (The gas company denies contaminating the water.)

The Sunset review of the Texas Commission on Environmental Quality, which regulates air pollution (and thus affects big refiners and other energy companies in Texas), is also likely to be a big topic. The review's recommendations included clearer enforcement actions.

There are proposals for merging some of the functions of the agencies — for example, consolidating electric, water and gas rate regulation at the Public Utility Commission, which currently handles electric-rate matters.

ERCOT, the grid operator, is also up for Sunset review. This should spur discussions of its job in changing the way it sets prices for moving electricity around the grid, a change launched Dec. 1 (and controversial for its high price tag, $660 million, twice what was originally proposed years ago).

The elephant-in-the-room topic for many these discussions will be the federal EPA. Long before it head-butted the Railroad Commission this week, the EPA has been engaged in a protracted tussle with the Commission on Environmental Quality over Texas' system of issuing "flexible" air-pollution permits for large plants (such as refineries). Lawmakers could dive in, if only to make an easy political point.

"We expect there will be a chance to try and get the Texas Legislature to pass legislation that said these flex permits are okay," says Tom "Smitty" Smith, state director of the consumer and environmental advocacy group Public Citizen, which will staunchly oppose such attempts.