More Subsidies, Less Reliability

Our state leaders continue to hand out more money to big business while claiming it will benefit us.

In this case, the Texas Senate “voted to set aside $3.9 billion for escalating costs being pushed onto customers.” While this sounds like a good idea, this money would go directly to businesses; it is unclear how much will make it back into the pockets of consumers.

In addition to this, the reason we are having to pay for this $3.9 billion in the first place is because during Winter Storm Uri the Public Utility Commission of Texas arbitrarily raised electricity prices to almost 200 times the average market price, and more than four times the price at the time they acted. And because the price hike could have been reversed, but Gov. Greg Abbott and the Texas House of Representatives refused to go along with the Texas Senate’s effort to do so.

All generators are getting subsidies today, but the underlying cause for this is the harmful effects of intermittent generation from wind and solar farms. Intermittency imposes huge costs on the system because dispatchable generation must always be on standby for when the sun stops shining and the wind stops blowing. An additional problem is that renewable subsidies allow renewable generators to practice predatory pricing that stops investment in reliable generation. This cost of this is unknown, but the recent costs of ancillary services and the Operating Reserve Demand Curve at ERCOT suggest that the cost of renewables to the market is at least $3 billion a year—on top of the subsidies they receive.

Two bills have been filed in the Texas Senate to deal with these problems. Senate Bill 7 attempts to make renewable generators pay for the reliability costs they impose on the system. Senate Bill 1752 goes to the heart of the problem by eliminating much of the more than $5 billion in annual, state-controlled subsidies and benefits renewable generators receive in Texas today. Both of these bills are required to solve the problem. Neither one on its own will restore sanity—or reliability and affordability—to the Texas electric grid.