Public Citizen Testimony Against SB 715 — Existing Energy Resource Firming
Public Citizen Testimony Against SB 715 -- Existing Energy Resource Firming
To: Chairman Charles Schwertner and the Members of the Senate Committee on Business & Commerce
CC: Sen. Phil King, Sen. César Blanco, Sen. Donna Campbell, Sen. Brandon Creighton, Sen. Nathan Johnson, Sen. Lois W. Kolkhorst, Sen. José Menéndez, Sen. Mayes Middleton, Sen. Robert Nichols, Sen. Judith Zaffirini
Via hand delivery and by email.
From: Adrian Shelley, ashelley@citizen.org, and Kamil Cook, kcook@citizen.org, Public Citizen, 512-477-1155
Re: SB 715, firming requirement – Public Citizen testimony against
Dear Chairman Schwertner and Members of the Committee:
On behalf of 30,000 members and supporters in Texas, Public Citizen appreciates the opportunity to testify in opposition to SB 715 relating to the applicability of certain generation reliability requirements. We are in opposition to this bill because it would retroactively force all existing energy resources to firm, which would be redundant, expensive, and possibly unconstitutional. Plus, as it stands, the ERCOT market largely works well.
This bill is redundant because firming is already built into ERCOT’s rules and procedures.
This bill is calling for the firming of all existing energy resources in ERCOT. “Firming” is the process where extra generation is brought into the grid to cover the gaps in electricity generation from renewable sources. This is one response to the fact that most renewable energy technologies are intermittent and are not always producing at their nameplate capacity.
The main issue with this bill is that there is already a host of firming mechanisms at work in the ERCOT market including ancillary services, emergency response services, and the ERCOT contingency reserve service. All of these services already do the same thing as this legislation would propose—ensuring there’s backup power that is always available.
This bill would raise energy prices.
Not only is this bill redundant, but it would also raise energy prices for the average Texan. It is much more efficient to back up the entire generation capacity of the grid rather than every single source of intermittent energy generation.
The ERCOT grid functions by managing supply and demand, ensuring that these two sides of the equation balance. At any given moment a wind turbine in West Texas slows down, or a gas plant in Houston trips offline, or a steam-fired coal unit requires maintenance. These natural lulls in energy generation almost never cause a significant outage because there are already existing backup mechanisms that can be called upon. ERCOT manages the grid as a whole, it does not rely on specific backups for specific sources of intermittent generation. Requiring one-to-one backup power for every generator in ERCOT would, in and of itself, be incredibly expensive. But this is not the only way in which it could raise prices for consumers.
It would also discourage new investment in ERCOT. The massive buildout of solar, wind, and batteries over the last five years has helped keep wholesale market prices incredibly low during otherwise extreme weather. One study shows that in the summer of 2023, the second hottest summer in Texas history, “renewables reduced wholesale energy expenditures by about $900 million, saving consumers significantly from what they might otherwise have had to pay.”1
This bill could also cause generators to leave the ERCOT market. Since this bill is retroactive (see below) it forces all existing generation to firm up by building or contracting for existing additional generation resources. This could be too expensive for some existing generators, pushing them out of business or at least out of Texas.
Any curtailment or reduction of renewables in the ERCOT grid will raise the electricity prices for everybody: residents, commercial customers, and industrial customers alike.
This bill is potentially unconstitutional.
This bill could be deemed unconstitutional, since it retroactively impairs existing contracts. The ERCOT grid has been a beacon for the rest of North America because of the ease at which generators can interconnect onto our grid. Our ‘connect and manage’ system allows for generators to come online within 3.5 years, compared to 6 years or greater for other grids in the country.2 This system has also benefited from Texas’s business-friendly permitting and regulatory system. This bill could ruin that reputation while opening up the state to lawsuits from existing generators.
HB 1500 (88R), passed last session, imposed a new firming requirement on generators who sign interconnection agreements after January 1, 2027. SB 715 expands that requirement to all generators that have been in operation for at least one year. This would make the existing firming requirement retroactively apply to existing generators. This is contrary to the agreement reached in HB 1500 (88R).
The ERCOT market is functioning well to provide affordable, reliable electricity.
This is not the first time that firming of intermittent resources has been attempted on the ERCOT grid. Last session (88R) dealt a lot with firming requirements, in response to Winter Storm Uri. One bill passed (HB 1500, 88R) that ensures firming going forward on a nondiscriminatory manner. This could be done individually or on a portfolio basis. It was set up for ERCOT to look at going forward. And that bill was not retroactive.
As a result of that legislation and previous legislation on ERCOT market design, the market has largely functioned how it is supposed to, especially after 2021. There are currently market structures in place, like ancillary services, which are designed to ensure there is adequate generation whenever it’s needed.
Conclusion
This is a bill with a high cost to industry and a low reward for the grid. For that reason, this is not legislation that we can support. There already exists a system in place in the ERCOT market to address the issue that this bill is seeking to solve—the intermittency of renewable energy. The impressive investment in renewables in the last few years in Texas has not made or grid less reliable—quite the opposite in fact.3 This bill would also raise the price of electricity for everybody by making it harder for new generation to come online and potentially forcing existing generation out. It is also possibly unconstitutional. For all these reasons we ask you not to pass SB 715 out of this committee.