Texas Needs Alternative Methods for Meeting Power Needs
Cyrus Reed, Lone Star Chapter of Sierra Club
THis was just published in Houston Chronicle on September 6th. The PUC is accepting comments on how to move forward on meeting energy demand until September 23rd and then having a workshop on the subject on October 8th.. Will keep our readers informed!
Last year, the Electric Reliability Council of Texas, a nonprofit agency overseen by the state that manages the flow of electricity to nearly all Texas customers, said electrical generation resources would be tight again this summer, though sufficient, and 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 from $3,000 last year to $9,000 per megawatt hour effective in 2015 to entice investors to put steel on the ground in Texas.
That apparently was not enough.
Currently, the PUC commissioners are considering creating an Operating Reserve Demand Curve, plus an “energy adder,” for any energy produced at times of scarcity while a separate proposal is to create a “capacity” market where generators would be paid for the future capacity they promise, even when they aren’t actually producing electricity.
With a third PUC commissioner recently named, this debate could get resolved soon, and the utility commission announced a workshop next month to try and set commissioners’ future course. We hope they move forward cautiously.
Let’s be clear. Ninety-nine percent of the time, there is plenty of electricity to go around, but the utility commission 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 while also encouraging newer, more efficient and faster resources to meet peak demand.
Here are four things the state can do right now.
First, the Electric Reliability Council should change market rules to allow “demand response” – literally 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, the council could actually take bids from commercial and industrial entities and even neighborhoods that agree to turn down their use of air conditioning or pool pumps or shift their industrial production at peak time.
A first phase of the project is making its way through the council stakeholder process and by next summer, a limited form of market participation could occur. More changes would be needed to make this participation full-scale. The council must move forward.
Second, the utility commission could and should expand required utility energy-efficiency programs. In 2011, Gov. Rick Perry signed a bill that requires the state’s nine investor-owned utilities that own the wires to promote energy conservation through energy-efficiency programs.
Since 1999, these efficiency programs have reduced demand by more than 1,500 megawatts – about the size of a large coal plant. Expanding this extremely successful program will reduce energy use and save money. Providing rebates to consumers who purchase smart thermostats, smart pool pumps and other energy-management systems to participate in programs that turn down energy use from appliances during peak times would be one place to start.
Third, Texas should upgrade the state minimum energy building codes for new residential and commercial construction just as many cities such as Austin, Amarillo and Houston have done.
The Energy Systems Laboratory at Texas A&M University has analyzed the new 2012 codes, and found that an average home built in Texas with updated building codes could save up to a third in total energy use and could reduce peak demand by 10 to 20 percent. It is now up to outgoing state Comptroller Susan Combs and her Energy Conservation Office to take action and increase minimum standards from the current 2009 code to the 2012 codes.
Finally, the utility commission and Electric Reliability Council should consider creating a new program or service – neither a true energy market nor an expensive forward “capacity” market that pays old dirty coal plants for just sitting around – that would provide an incentive to new market participants that provide fast-acting power at peak times.
This new “capabilities” market or service would reward those ratcheting down demand, batteries that provide energy storage, solar plants and newer, fast-acting gas plants that can respond at a moment’s notice to provide power. By paying for the extra service of resources that can provide power at peak times, the Electric Reliability Council and the utility commission could provide market signals that Texas needs “flexible” power, not just any steel on the ground.
So before the utility commission raises the price of everyone’s electricity bills through an energy adder, or by creating a new capacity market, or both, let’s consider more cost-effective ways to actually save energy and keep our homes cool over the next two years.
We can do this by creating a market for demand-response, more robust energy efficiency programs, better buildings through more efficient codes, and a new capability market for energy resources that can meet peak demand. These are much more cost-effective – and cleaner – ways to meet our energy needs.
Reed is conservation director for the Lone Star Chapter of the Sierra Club.