Cyrus Reed: Low-cost options vs. blackout scare tactics

The following editorial was originally published 16 September 2012 10:30 PM in the Dallas Morning News

In May, the Electric Reliability Council of Texas said electrical generation resources would be tight again this summer, though probably sufficient, and would really start running low around 2014. Subsequently, the Public Utility Commission raised the maximum amount that electrical generators can charge the public at peak times of demand from $3,000 to $4,500 per megawatt-hour to make sure the juice keeps flowing and investors pour into Texas. Now it is considering raising the price again to $9,000 per megawatt-hour and even adding a California-style “capacity” market where generators would be paid for the capacity to produce energy, even when they aren’t actually producing energy, as a way to ensure sufficient resources.
That’s right: Our appointed commissioners are proposing to raise energy prices on homeowners and businesses and pay generators just in case they are needed in order to change market conditions and encourage new investments. But before authorizing an increase in electricity prices or changing our energy-only market, the PUC and other state leaders should look at quick, low-cost options that lower demand at peak times through energy-efficiency programs, solar power and greener buildings.
During two periods last year — a particularly cold February morning and a couple of hot August afternoons — Texas came close to blackouts because there was barely enough juice in the system to keep our heaters and air conditioners running. Now the average consumer’s electric bill could go up by as much as $40 a month.

Ninety-nine percent of the time, there is plenty of electricity to go around, but the PUC is proposing big, expensive changes for the two or three days a year when there might be a problem. Instead, we should focus on programs that will actually reduce demand at peak times.

First, the PUC and ERCOT should change market rules to allow “demand response” — reducing our energy use at peak times by shifting our energy use — to actually get paid by bidding into the market. Essentially, with some rule changes and new software, ERCOT could actually take bids from commercial and industrial entities and even whole neighborhoods that agree to turn down their use of air conditioning or shift their industrial production at peak time.

Second, the PUC must expand required utility energy-efficiency programs. In 2011, the governor signed a bill that requires the state’s nine investor-owned utilities to promote saving energy through energy-efficiency programs, including measures like rebates for new insulation or efficient air conditioners. Since 1999, efficiency programs sponsored by these utilities have reduced demand by 1,365 megawatts — about the size of a large coal plant. Expanding this extremely successful law will reduce energy use and save money.

Third, Texas should adopt new minimum energy codes for new residential and commercial buildings just as Houston has done. The State Energy Conservation Office is now taking public input on whether the state should increase minimum standards from the current 2009 code to the 2012 codes developed nationally. The Energy Systems Laboratory at Texas A&M has analyzed the new codes, and their analysis shows that an average home built in Texas with updated building codes would save up to 40 percent in total energy use and reduce peak demand by up to 18 percent.

Finally, the PUC should implement a law that has been on the books for seven years now — requiring those serving loads to expand their use of renewable energy from sources other than wind like solar and geothermal by at least 500 megawatts by 2015 and consider setting a larger goal of 3,000 megawatts by 2025. Solar helps meet peak demand because it is exactly at the hottest time of the summer when solar power is most beneficial.

Before the PUC raises the price of everyone’s electricity bills to make it more profitable to build new power plants that we’ll only need a few days per year, let’s instead consider these more cost-effective ways to actually save energy and keep our homes cool over the next two years.

Cyrus Reed is the acting chapter director of the Lone Star Chapter of the Sierra Club and may be contacted at cyrus.reed@sierraclub.org.

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