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Why the Texas PUC Ignored Gov. Abbott

Last week, the Texas PUC ignored Gov. Greg Abott’s admonition to move forward rapidly with their redesign of the Texas electricity market. On this week’s Liberty Cafe, we explore why the PUC commissioners ignored their boss and what effect this might have on the reliability of the Texas grid and on Texas consumers.


This podcast was transcribed by a robot called Otter.ai. Please forgive any errors in the text, as robots still have a lot to learn:

Something very intriguing happened last week in Texas politics. Texas Governor Greg Abbott sent a letter to his appointees at the Texas Public Utility Commission, encouraging them to move forward fast quickly on the redesign of the Texas electricity market. They’ve been working on this really since the legislature passed some bills back in 2021. About the whole market redesign in response to the problems with winter storm URI, when, as most of us know, we went without electricity for days here in Texas. But an interesting thing happened. The PC when it met last week, a few days after Governor Abbott’s letter didn’t do anything. In fact, they said they’re going to be open to more input on how the market redesign process should go forward. Why did they ignore Governor Abbott? Well, that’s what we’re going to talk about today. In more on this week’s episode 111 of the Liberty cafe. Hi, this is Bill peacock. And I’m so blessed, as I am every week to have you come in and listen to the Liberty cafe. Well, you may not be coming in every week to listen to Liberty cafe, but I hope you are. And if you’re not, maybe you can pick it up a little bit more. And I’m always trying to pick it up and make the Liberty Cafe something that you want to come listen to. And then of course, always grateful for the folks over at Texas scorecard. They’re doing great work on they’re working on the electricity market they’re working on, you know, all the child abuse that’s going on in Texas are working on the fiscal side of things, the budget, and a lot more than that. So go over to Texas scorecard.com, and see what they’re doing and what you can do to continue the fight for liberty here in Texas. Well, like I said, it’s really interesting, because the commissioners at the PUC are all appointed by Greg Abbott, they have to be confirmed by the Texas legislature. But he appoints them, they’re his employees more or less. And, you know, for instance, in the past, I know of a commissioner who voted did not vote the way on something that the governor at the time wanted that commissioner to vote on. And it was within a week or two that that Commissioner submitted his or her resignation. Right. It just works that way. Right? When the governor appoints you to something like that, the governor expects you to kind of follow along with what he wants to do, for the most part, particularly when you have a micromanaging governor, which Greg Abbott can be sometimes and then other times, he doesn’t really pay much attention to what’s going on underneath him. But when it comes to the Texas electricity market, he or his staff are paying a lot of attention. So he sends this letter to his people over at the Public Utility Commission, all of which he has appointed, and tells them essentially get move. And he says Time is of the essence, you’ve been doing this, for what what is a, you know, 18 months, he says it’s an extensive stakeholder engagement process. And it’s time to get moving forward time is of the essence as as he said. And then the PC comes to the hearing where they could do this, you know, they’ve got this plan that they put out, it was commissioned out to this company called E three. But trust me the recommendations in this report, were all kind of guided and directed by the commissioners at the Public Utility Commission. And so they had about five different options about a path forward. And they seem to be liking one of those options. Back when they hold held public hearings on this last year. Avid seemed to come out with a different option that he liked, but in any direction. In any case, he said move forward. And so they had this plan before them they could have voted to move forward on one of the options and tell people to get started on it. But they didn’t do it. Why would they ignore their boss like that? Well, it turns out that Greg Abbott isn’t the only boss that the Public Utility Commission has, in fact, another boss they have it’s kind of an indirect thing, but it’s an important relationship is The Texas legislature, the Texas Legislature oversees, through in the Senate, the Senate Business and Commerce Committee, and the house the House State Affairs Committee, oversees the PUC. The Texas Legislature provides funding to the PUC. The Texas legislature doesn’t appropriate money, the PUC, they don’t get any money. And so when you oversee an organization like the PUC is a government agency like the PUC, when you have the purse strings in your hands, like the PUC, for the PUC, like the legislature does, then, you know, sometimes you got to pay attention to the legislature, in addition, or all the time really, in addition to the guy who puts you on the commission. And so what had happened. So the PUC had held this big public hearing, and says, Oh, this is a great plan. We like it. We’re going to examine this and move forward quickly. That was towards the end of last year. And then the Texas legislature actually the Texas because Texas Senate Business and Commerce Committee, held a public hearing where they heard testimony from both the PUC and experts and industry experts and the public as well, including me, I was down there and got my three minutes of fame on all that. And a lot of people including me saying, wait a minute, this is a big problem. The manufacturers in Texas said it was a big problem, the ERCOT Market Monitor and this is an economics firm Potomac economics out of DC. He has been hired by the state of Texas to ensure the competitive nature of the Texas electricity market. The legislators kind of messed with that in a lot of ways. But still, anyway, the economist who works for Potomac economics, said, This PUC plan was not a good deal. And so one of the big problems that people brought up was that it was going to cost a lot of money. And it was going to disrupt market competition. And in my case, and a couple of others said that it wasn’t going to do anything to deal with one of the main reliability problems in Texas, which was, which is renewable energy under the any of the PUC has options that they have in their plan. Over the next four years, renewables are going to make up 99% of all new generations. So the Senate got an earful from all these people, and ask a lot of questions about whether any of these plans were the right thing to do going forward. And so maybe a week or two after that hearing. The the Texas Senate Business and Commerce Committee sent a letter to the PUC saying, Whoa, hold on. Wait a minute. We want to have some input into this, because the PUC had told everybody that their plan was to adopt one of these plans within within either the end of last year or the first part of this year. So they could move forward because they had their direction from the Texas legislature back in 2021. And it was time to get moving. So that was their pathway that they had laid out for everybody. But the Texas Senate Business and Commerce Committee said, Whoa, wait a minute, slow down. We want to have some more input into this. Now, of course, that committee, I think it’s nine members. It’s only nine members of the 181 members of the Texas Legislature, but they’ve got some pretty significant input into what goes on when it comes to the PUC. And so what you had going on here was a few members of the Texas Senate versus the PUC and Governor Greg Abbott about whether they should move forward. But there’s some other things that were going on in the background. You also had Lieutenant Governor Dan Patrick, who has come out and said that he favors an approach that actually puts new generation in the ground. This is a plan that he hasn’t come out and doors specifically the Warren Buffett plan, but it’s basically the Warren Buffett plan he’s been talking about which Warren Buffett and Berkshire Hathaway proposed right? Pretty soon after winter storm Yuri, that if the Texas Texas, Texas consumers, you and me would pay him $8 billion or so that he would come in and build a bunch of new natural gas fired plants in Texas. And then if we needed electricity, they wouldn’t run most of the time. But if we needed electricity, then they turn on and we’d have electricity. Now that sounds kind of good. Maybe it least compared to the You see plans that actually guarantees that new generation is going to go into the ground. But it doesn’t fix the problems with the current market, which are really, the problems with the current Texas electricity market are too much government intervention into the marketplace. And so Berkshire Hathaway’s plan, which some form of which Dan, Patrick seems to like, isn’t going to solve the problem because it’s more government intervention. So what we need is less government intervention, we need less renewable energy, we need less subsidies for renewable energy. If we can’t, and we can’t shut off the federal government spigot for renewable energy subsidies, which just gone on steroids under the inflation Reduction Act by President Biden and Congress. We can’t turn that off. But we can penalize the producers, generators in Texas who take that money and harm the reliability of the Texas market. So we can do a lot of things to deal with this. But nonetheless, whether it’s a good plan or not, I think Lieutenant Governor Patrick was also in the works this past week or two, trying to slow down what was going on with the PUC under the direction of Governor Abbott to move forward. And then the the final piece of all this, which is really fascinating for me, politics, I love this stuff, is that the Public Utility Commission is under Sunset Review this session. And which is really interesting, because what that means is that the statute that authorizes the existence of the Public Utility Commission will expire at the end of I think it will expire. I think it expires in probably the end of 2024. Right before the legislature comes back and in 2025. Or maybe it’s actually right at the end of the after session September 1 of this year. I’d have to go back and look but anyway, it goes away. And with that the PC would go away, unless the Texas legislature passes a sunset bill on the PC, which renews the PUC. So all of a sudden the PC has a lot at stake. It’s not just what the Business and Commerce Committee is saying or maybe even what the Senate Finance Committee is saying. Because the House of Representatives these days tends to like all this corporate welfare, big dollars going into renewable generators and existing generators and all these kinds of things. There is really bad over in the house when it comes to corporate cronyism. It’s just bad. I can’t say that. So despite all that, then you can have because it takes two thirds of the folks in the Senate to bring up any bill for debate was not quite two thirds anymore. 60% or so. What is it 18 or 19 votes in the 31. Member, Texas senate. So if you get 12 or 13, folks, depending on what the number is, you can block any bill from coming up for debate in the Texas Senate and that bill dies, including potentially the sunset bill for the Texas PUC. So, the PUC has a big stake this session and the Texas Legislature. So my guess is that despite Governor Abbott’s admonition, encouragement for the PUC to hurry up, remember, Time is of essence, he told them. Instead, they paid a lot more attention to what the Texas legislature saying them saying to them, and they just put a halt on it. And they’re going to take some time. My guess is they wait until the end of the legislative session for the legislature to renew them through the sunset process and any bills that might come out of the legislature to give them more direction on what the PUC should do in this market redesign. So that’s what happened this past week. Again this kind of fascinating for me because how these machinations go on and and how the politicians do all this kind of stuff. Now, the sad thing in all this from from my perspective is that even though the PC has kind of been put on hold the options that the Texas legislature are considering Dan Patrick’s plan over here, whatever it might come out of the Texas House are not really good ones for Texas consumers. So I’m with the one I do a lot of things but one thing I do is I work with the the Energy Alliance here in in Texas and put We look particularly at Texas. And we just put out a report this week that talks about the problems with the Texas electricity market. And, you know, the kind of the foundation of a report was that the PCs effort to redesign the market makes the market more expensive, but less reliable, right. So it’d be one thing, I mean, it wouldn’t be good. But at least if they were spending a lot of money to make the market more reliable, you know, at least you can see the some benefit in that. And that’s kind of what the Berkshire Hathaway plan does cost a lot of money. $8 billion. And I don’t know how much money that cost per year. But this could be in the hundreds of millions of dollars, over parent paying it off period, over 30 years or so. But you know, at least you have that going for it. But the PCs plan doesn’t do that more expensive and less reliable. And you can see that basically in the fact that, as I mentioned earlier, 99% of all new generation is going to be renewable, which means it’s not going to be there when we need it most. It’s intermittent generation, instead of reliable, always on except for maintenance. And then when you have things like winter storm, Mary, which causes problems with everybody. So we can’t survive as an energy market in Texas electricity grid in Texas, with all the new generation basically being renewable, it’s going to make a bad situation worse, and that’s kind of what our report puts it out there as but so but what’s the alternative to that? Well, we have a bunch of recommendations is but the bottom line is that one of the key things that the PC is doing is they’re saying we need a reliability standard here in Texas. Now, I don’t want to get too far in the weeds for y’all here today. But the beauty of the Texas electricity market, which was introduced the competitive Texas renewable energy, sorry, competitive Texas electricity market, which was passed in Law by the Texas Legislature and in 1999, and went into partial effect, phased in in 2001. And then full effect in 2007. The beauty of all that was, there was no reliability standard, there was no PC telling generators, how much to build, and how much it was going to cost us and said, instead, generators came to Texas and built generation plants. And if they could sell their electricity to consumers, and that would be you know, us as individuals, and then businesses, small businesses, and some of these big huge manufacturers like Texas Instruments, and Exxon Mobil and those kind of things, if they could sell their electricity to profit, they made a profit. If they couldn’t sell it at a profit, they lost money. And if they kept doing that for long enough time, they went broke. And that happened in the marketplace. And that was the beauty of the market. But now what the PC wants to do, and they say it’s required in the legislation that the Texas Legislature passed, but it’s not, there’s some stuff about a reliability standard in there, but it’s not mandated at all. Now, they want to come in and say, Okay, we’re going to say we need this much electricity. And, which means if we don’t have that much electricity, they’re going to be mandating people to build stuff. And if you do that, you got to start mandating prices. So you got to start telling people how much money they’re gonna make. At that point in time, it all falls apart. It’s just like saying, you know, going into the computer industry, and the US government, and you know, who knows, we might not be that far away from this, but telling the US government, or the US government telling the computer industry, we need this many computers, and the industry says, Well, no, we don’t. And they say, Well, yes, we do. And so here, here it is, and then you can sell it, you have to sell it for this price to make your money. And by the way, we’re not gonna let anybody else sell computers, except for you guys who we tell you to build to build the stuff. Well, that’s kind of what would be going on here in the Texas electricity market. So the first thing we say is just don’t put a reliability standard in the place. Let the generators and the consumers the buyers and sellers determine how much electricity we need, much more efficient, much more cost effective. We need to scrap the PCs market redesign project that just needs to go away. And then we need to get rid of chapter 312 and 313. Property tax abatements Which tradition I mean the majority of the projects under those plans. Basically, a business comes into a school district or a county and says we want to build a generating plant here or manufacturing plant, if you’ll cut and we’ll come if you’ll cut our property taxes in half for 10 years, well, most of those are going to renewables. So 313 went away. That’s for school districts last time, we need to make sure the legislature doesn’t renew that although David feeling speaker, the House says he wants to at least get rid of that we also really ought to get rid of chapter 312. And not let renewables use those things. And then finally, we need to force renewable generators to pay us back for all the harm that they are doing. To the Texas market, the reliability problems, it costs billions of dollars a year to overcome the damage being done by renewable energy. We’ve calculated that at the Energy Alliance, and we’re estimating about $8 billion a year, there’s a electricity tax of about $8 billion a year on Texas consumers some of that we pay in our income tax bill through the federal government, some of it we pay through property taxes, and then some of it we just pay through the cost of electricity, and about $6 billion a year that is under the control the Texas Legislature. So if they would force renewable generators to pay us back some portion of that money, and a portion, a lot of those costs out to renewable generators and to other generators. If they’re causing some problems, and some of them are, then that’s the path forward all this. So I hope I haven’t gotten too far down in the weeds on this. But really, when it comes to what we need to do, to fix the Texas electric grid, the Texas electricity market, is to get government out of it. There’s no reason for the government to run, much less even regulate for the most part the Texas electricity market, and let buyers and sellers conduct business without all this government intervention. Mainly, the bottom line is we need to let the Texas electricity market work. Well, thank you for coming and joining me today on the Liberty cafe. And thanks once again to our sponsors, Texas scorecard. Thank you for listening to the Liberty cafe with Bill peacock. This show is produced by Texas scorecard. You can learn more about the show and find other shows at Texas scorecard.com. Be sure you subscribe and rate the show on whatever platform you listen on. See you next time.

Transcribed by Otter.ai.


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