Texas House goes further than Senate to protect state’s main power grid as time to agree on bills winds down

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After hours of debate Sunday, the Texas House moved to strengthen the state’s main electricity grid in the wake of February’s catastrophic power outages, giving preliminary approval to a proposal that goes further than the Senate’s in preparing for extreme weather.

The upper chamber already passed Senate Bill 3, but the House State Affairs Committee added more requirements for natural gas facilities to properly prepare for extreme weather, though the legislation doesn’t currently say who would cover costs for weatherizing such infrastructure and critics on Sunday raised concerns about how the state would ensure companies actually weatherize.

The House granted final approval to the bill Monday. Now the measure is likely headed to a conference committee where the House and Senate would iron out their differences, unless the Senate decides to accept the House's changes. The two chambers have about a week to get the measure across the finish line.

The House proposal also would not target renewable energy sources, like wind and solar, to cover the costs of having reserve power available to the main Texas grid. SB 3 would instead require the Public Utility Commission of Texas, which oversees the state’s main power grid operator, to review whether there could be more reserve power available from non-renewable sources.

Under the House proposal, Texas regulators would also have to ensure natural gas facilities do not lose electricity during an emergency, as many did in February, exacerbating blackouts.

One notable effort Sunday came from one lawmaker who tried to add a provision to SB 3 that would have studied the feasibility of having a significant power reserve available to the grid for emergencies only. The provision echoed the push by billionaire Warren Buffett’s Berkshire Hathaway to build 10 new natural gas power plants across the state for emergency use only, an $8.3 billion price tag paid for by Texas electricity customers.

After much debate, the provision to warrant a study failed, likely sinking Berkshire’s pricey pitch and the prospect of the corporation building emergency power reserves in Texas.

While lawmakers tried to add nearly 30 amendments to SB 3 on Sunday, many were not approved. But a series of smaller provisions were added to the proposal and now, the House and Senate only have days to come to an agreement to approve priority legislation responding to the winter catastrophe and send it to the governor’s desk by the Memorial Day closing date of the legislative session.

Also on Sunday, the House initially passed its version of Senate Bill 2, which seeks to change the governance of the state’s main grid operator, the Electric Reliability Council of Texas. The House version, approved with broad support Sunday, said that the five experts on the 16-person board of directors for Texas’ main grid operator must be approved by both the Public Utility Commission, which oversees ERCOT, and by a majority of the governor, lieutenant governor and speaker of the House.

Under the House version, the governor would, however, appoint the chair of the ERCOT board, who must reside in Texas.

This is a departure from the upper chamber’s version, which all but one Senator approved, that would have given the governor five ERCOT board member appointments — a change experts said would do little to improve the power grid.

But Rep. John Smithee, R-Amarillo, said he has issues with the ERCOT board existing at all.

“What is the purpose of the ERCOT board?” Smithee said Sunday on the House floor. He added that the board is “a level of bureaucracy we really don’t need.”

Rep. Chris Paddie, R-Marshall, who authored the House versions of SB 2 and SB 3, said in response to Smithee that the board “is charged with running this, essentially, about a $300 million corporation, is almost how you have to look at it.” Paddie said experts on the ERCOT board “are expected to have a very highly technical level of expertise in some very specific areas.”

“This is complicated stuff that I would not be anywhere close to being qualified to serve on,” Paddie said. “And so we want to make sure that we can have the best and the brightest to be able to do that.”

But much of the lower chamber’s focus on Sunday centered on SB 3 and changes over who pays for reserve power.

Texas electric providers currently cover costs of making sure there is reserve power, which is called “ancillary services.” The Senate wanted to saddle only renewable energy sources with such costs. Rep. Donna Howard, D-Austin, called the House State Affairs Committee’s unanimous decision to remove that provision more “holistic.” The majority of the House agreed.

The House version would also require many natural gas companies that provide gas to power plants to register as critical infrastructure so the grid operator doesn’t disconnect their electricity. Dozens of natural gas companies failed to do the paperwork that would have kept their facilities powered during an emergency prior to February’s winter storm. Utilities cut their electricity at the very moment power plants most needed fuel.

Under the current version of SB 3, this process of ensuring natural gas facilities are registered as critical infrastructure will be carried out jointly by the PUC and the industry-friendly Railroad Commission, which regulates the state’s massive oil and gas industry. But the gas industry and electric industry, regulated by the PUC, typically don’t get along, according to a former independent watchdog of power grid operator Electric Reliability Council of Texas.

“It frankly at some levels is a pretty dysfunctional relationship,” Beth Garza, ERCOT’s watchdog from 2014 to 2019, said leading up to Sunday’s vote.

She added that “forcing the two industries to work together and produce something is a step in the right direction.”

The House version also tasks the Railroad Commission with ensuring natural gas pipeline facilities can maintain service during extreme weather if the pipeline serves a natural gas powered generation plant providing power to the grid.

The agency has known about the grid’s vulnerabilities to winter weather for years, but it has repeatedly ignored recommendations to prepare for such weather.

If that provision of the legislation is approved, new weatherization regulations brought by the agency likely wouldn’t happen until at least after the 2022 winter.

Still, lawmakers like Howard were encouraged by the House version.

“I really appreciate all the work you’ve put into this,” Howard said to Paddie at a House State Affairs Committee hearing on the bill. “It’s really a huge step forward.”

Energy experts at a press conference this week said the House version is moving in the right direction, but they’ve expressed concern about whether agencies such as the Railroad Commission that have ignored weatherization recommendations in the past are up to the task now.

After all, gas generation was the most significant component of February’s power outages. Fuel shortages enhanced the cascading crises during the storm as natural gas-fired power plants were at times unable to get enough fuel to run plants. The inability of natural gas-fired plants to generate electricity was due to equipment failures in the weather as well as the fuel shortages.

The House committee’s version of the bill retained a Senate provision that would implement an emergency statewide alert system. In the days leading up to the winter storm, Texans were not warned about the prospect of widespread power outages lasting for days in freezing temperatures.

During the days the power was out, the Texas Division of Emergency Management didn’t provide accessible and life-saving updates on outages and inclement weather. More than 100 people died.

As the Senate’s approach responding to the storm came in the sweeping SB 3, the House put forward a host of its own standalone proposals. One of those, House Bill 16, is headed to the governor’s desk. It would not allow residential or small-business electricity customers in Texas to sign up for electricity plans where wholesale prices for power are passed to customers. Those plans include the kind that caused February power bills to skyrocket for several customers of Griddy Energy and other companies. Some customers reported bills over $15,000.