“House approves bill capping what Texas consumers would pay for new tool to boost power plants” was first published by The Texas Tribune, a nonprofit, nonpartisan media organization that informs Texans — and engages with them — about public policy, politics, government and statewide issues.

(Texas Tribune) — Texas House members gave preliminary approval to a major bill Monday that would limit the amount of money electricity customers would have to spend due to performance credits, a new financial tool that is designed to bring more power online from gas- and coal-fueled power plants.

Senate Bill 7 would limit the net cost of the new financial mechanism to $1 billion a year. Under the bill, the money would go to companies that operate gas and coal plants, along with those that operate batteries, as an incentive to build more plants or extend the lives of existing ones.

Opponents of the credits argue the companies could just pocket the added revenue and not generate more power.

State Rep. Todd Hunter, R-Corpus Christi, who sponsored the bill, passionately spoke about the need for legislators to act apart from industry interests. He chastised companies for wanting an open checkbook in exchange for saying they know best.

“What’s the cost to the taxpayer?” Hunter said. “That’s the bottom line of this bill.”

House members also gave preliminary approval to a slightly amended Senate Bill 2627, which would create a state-funded, low-interest loan program for companies that want to construct gas-fueled power plants and would pay a bonus if those plants are completed and connected to the state’s main electric grid by 2029.

Electricity regulators approved the idea for performance credits earlier this year. Texas Public Utility Commission officials said it was meant to increase the reliability of the grid by incentivizing companies to build and operate the type of power generation that can be turned off and on regardless of the weather, unlike wind and solar power.

Power generators would sell the credits in exchange for promising to be available to produce power in tight times. Companies that sell electricity to consumers would be required to buy them. The cost would likely be passed on to businesses and residential electric customers on that main power grid.

An unexpected coalition of consumer advocates, oil and gas lobbyists, and environmental activists had demanded a cost limit for the idea. They argued it would provide needed protection for consumers against higher electricity bills.

“Without cost caps, it’s a blank check to power generators paid for by all ratepayers,” Todd Staples, president of the Texas Oil and Gas Association, said in a statement.

Companies that operate gas-fueled power generators had opposed a cap, saying it would reduce or kill the effectiveness of the credits.

Rep. Chris Turner, D-Grand Prairie, aligned with that viewpoint, along with other Democrats.

“This bill will increase costs to our constituents, and it will not increase reliability,” Turner said. “That’s the truth. It’ll cost our state, the businesses in our state and our constituents, most importantly, it will cost them money without increasing reliability. And that’s the worst of both worlds.”

The Senate and House will have to iron out differences in the two versions of the bill.

The Senate capped the cost of credits at $500 million a year. The House version has a net cap, which means any savings on the price of electricity because of the credits would be taken into account. It’s not clear how that would be calculated.

The Senate committee version of the bill also excluded companies that build battery facilities — most commonly used to store electricity from solar or wind producers — from selling credits, even though they could theoretically provide on-demand power. The House committee version did not.

This article originally appeared in The Texas Tribune at https://www.texastribune.org/2023/05/22/texas-electricity-power-plants-performance-credits-bill/.

The Texas Tribune is a member-supported, nonpartisan newsroom informing and engaging Texans on state politics and policy. Learn more at texastribune.org.