Regulatory Updates by Region

In Texas, We Like Our Home Cookin’ and Only Our Home Cookin’

Texans make no bones about liking food.  As fiercely independent renegades who produce and sell enormous amounts of crops and critters, Texans have come to love all forms of cuisine, especially if deep fried in a dense batter and spicy.  And just like food, Texans enjoy creating and controlling other aspects of the state’s economy including electric generation, transmission and sales.  We cannot deep fry it and spoon it onto a plate, but electricity has been an entree for Texans over the last 75 years.  

The considerable industry in Texas is fed by cost effective electricity, as is the ability to produce oil and natural gas, both of which feed our country with essential goods.  Anything that threatens the well being of the electric grid threatens the very fabric of the state’s economy.

The Texas Legislative Session ended June 1, and lawmakers made clear that its primary power region, the Electric Reliability Council of Texas (ERCOT), will remain independent of federal jurisdiction.  Concerns were raised over the possibility of exporting power to Mexico at a time when South Texas was short on electric supply.  Not only would this exacerbate the summer shortage, but it could also invite the Federal Energy Regulatory Commission (FERC) to exercise jurisdiction over the majority of the Texas grid.  Consequently, a bill was passed by Senator Troy Fraser to prevent FERC from intervening in this guarded market. 

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Fraser’s bill, Senate Bill 933, grants PUCT authority to review interconnections for the importation and exportation of power into and out of ERCOT.  Any interconnection of a “facility” to ERCOT that would import or export power on the grid requires a certificate from the Public Utility Commission of Texas (PUCT) before a FERC filing is made.  Excepted from this requirement in section c-2 is the Southern Cross project that interconnects Panhandle area wind generation to SERC.  The key language follows:

Section 37.051, Utilities Code, is amended by adding Subsections (c-1), (c-2), and (c-3) to read as follows:

(c-1)  Notwithstanding any other provision of this title except Section 11.009, and except as provided by Subsection (c-2), a person, including an electric utility or municipally owned utility, may not interconnect a facility to the ERCOT transmission grid that enables additional power to be imported into or exported out of the ERCOT power grid unless the person obtains a certificate from the commission stating that public convenience and necessity requires or will require the interconnection.  The person must apply for the certificate not later than the 180th day before the date the person seeks any order from the Federal Energy Regulatory Commission related to the interconnection. 

Why is this important?  The Legislature signaled its continued intentions to battle with Washington on matters of policy.  In addition to Fraser’s bill, several other bills and resolutions were passed to express independence from federal oversight.  The Environmental Protection Agency’s (EPA) Clean Power Plan presents a different but significant challenge to the Texas grid.  As the leading renewable generator of any state in the US, Texas would be required to add significantly more renewables that may present cost and operational challenges.  One of the most ambitious transmission construction plans on record, the Competitive Renewable Energy Zone (CREZ) lines built to accommodate 18,000 MW of wind energy, nears completion but has already presented on some operational issues for ERCOT.  While additional renewable generation would be welcome, it must be introduced in a way that makes sense for the larger economy.  Perhaps localized rooftop solar makes the most sense for ERCOT?

We will certainly find out in the years ahead.  Consumers have expressed displeasure with the billions spent on the CREZ transmission lines, so any major project to support generation of any kind will be scrutinized.  One thing is sure: a law or regulation that threatens the preparation of a chicken fried steak with cream gravy, mashed potatoes, fried okra, green beans, cornbread, and a quart of iced tea is sure to get a taste of Texas independence pretty quick.

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