“Texas politicians have added at least $38 billion to the cost of electricity through higher bills or higher taxes since 2019…. Retail rates haven’t reached the level of New York ($0.24 per KWh) or California ($0.32), but Texas’s rising $0.15 rate is disconcerting.”

With its grid overwhelmed by renewable energy, Texas is putting natural gas back in the game. The Public Utility Commission of Texas (PUC) has received 125 notices of intent that propose more than 55,000 megawatts of new generation, most of it gas-fired.

Texans should not be surprised at this turn of events. Generators are simply following the money. Taxpayer money, that is.

Background

After Winter Storm Uri, public pressure forced Texas politicians to wake up to—though not confess—the damage they had caused by throwing billions of taxpayer dollars at generation that only works when the weather permits.…

Editor’s Note: The following is the second in a three-part series by the Energy Alliance, a project of the Texas Business Coalition, examining how the Public Utility Commission of Texas has violated consumer choice and market forces in the Texas electric market. Yesterday’s post, Storm Uri: The PUCT’s $26 billion Electricity Tax.

On January 30, the Texas Supreme Court will hold a hearing to determine whether the Public Utility Commission of Texas (PUC) violated the Texas Legislature’s instructions that “electric services and their prices should be determined by customer choices and the normal forces of competition” when it arbitrarily set the price of electricity at $9,000 per megawatt hour during Winter Storm Uri. The Texas Third Court of Appeals has already determined the PUC’s action to be illegal.…

“This seems a little crazy. During these negative price periods, suppliers are paying ERCOT to take their power…. You could … build a giant toaster in West Texas and be paid by generators to operate it.”

Some 15 years ago, Michael Giberson at Knowledge Problem commented on a strange phenomenon–negative pricing by wind power, where operators with very low marginal costs (the wind is free) were paying takers per KWh to gain big tax credits, mostly federal.

Giberson’s analysis (reposted below) identified the malinvestment and ‘big anti-conservation incentive’. But he did not focus on what cumulatively would result from this distortion: a wounded Texas grid from chronic low prices/margins knocking out thermal generation. The unreliables–via government privilege– knocking out the reliables (what Bill Peacock would call predatory pricing).…

“The predictable but inevitable intermittency of renewable energy had created a grid emergency that would not exist on a grid that operated without renewables…. natural gas peaker plants would have handled the load at peak demand, the riskiest time for a normally functioning grid.”

“Governor Greg Abbot should declare an energy emergency and call the Texas Legislature into special session and keep them there until they eliminate all Texas subsidies for renewable energy and force renewable generators to pay for the costs they have imposed on Texas consumers.”

As many renewable advocates like to point out, solar often provides good performance during periods of high temperature. Leaving aside for the moment the performance of solar compared to installed capacity, at 5 p.m. solar came close to its expected output of 12,636 MW.…