Sweeping legislation that the Texas Senate passed unanimously this week in response to February’s winter blast, which resulted in a near collapse of the state’s grid and blackouts that lasted days, could hit renewable resources with extra costs that one opponent called a “really dumb idea.”

Tucked into Senate Bill 3 is a requirement that “intermittent generation resources” purchase ancillary services and replacement power “sufficient to manage net load variability.” The language does not mention thermal resources, which ERCOT counted on to meet expected record demand last month but never materialized in the harsh conditions.

“You’re undoing decades of precedent. Texas is still a place where we honor commitments made to investors,” Advanced Power Alliance President Jeff Clark told RTO Insider, referring to the $60 billion invested in renewables. “This bill doesn’t serve anybody. It just increases the costs to customers. If you’re going to start assigning ancillary services, let’s do it for all generators.”

Clark, who labeled the measure “dumb,” pointed to the U.S. Energy Information Administration’s capacity factor for wind energy, which it lists at 35.4%. EIA says photovoltaic solar has a 24.9% capacity factor.

“Renewable energy is not a random resource. It is a relatively predictable resource in the short term,” he said. “There is a need for ancillary services, but there is a need for ancillary services for every generator. A fair approach to this would be assigning the ancillary services to the extent they can be attributed to any party.”

Beth Garza, a senior fellow with R Street Institute and former director of ERCOT’s Independent Market Monitor, sided with Clark.

“I believe that ancillary services costs are best assigned directly to load,” she said. “ERCOT should determine the quantity of ancillary services required to ensure reliable operation for all loads, given all generation. By keeping the allocation simple and direct, loads will pay the lowest cost for those services rather than a generator’s risk adjusted approximation of those costs.”

Garza noted that ERCOT’s ancillary services requirements have decreased overall, despite the large influx of intermittent generation.

“Our procurement of ancillary services has stayed flat,” Clark said, while the state’s renewables have increased by 262% over the last 10 years.

The language was an amendment offered by Sen. Kelly Hancock (R), who had proposed similar legislation of his own. Hancock chairs the Business and Commerce Committee, which conducted several hearings on the blackouts. (See Texas PUC Won’t Reprice $16B Error.)

SB3 would give the Public Utility Commission the authority to fine generators and utilities up to $1 million a day for not weatherizing their power plants or transmission lines. It would also set up a Texas Energy Reliability Council to improve the electric and gas industries’ coordination and communication; create an improved outage alert network; and limit scarcity pricing to no more than 12 hours in succession.

“Requiring weatherization of those in the energy supply chain is a positive step forward,” Houston Mayor Sylvester Turner, a former legislator, told the Houston Chronicle. “The question is who will pay for it.”

The bill does not mention who would be responsible for those costs.

Lt. Gov. Dan Patrick, president of the Senate, said the body has “taken a significant step to addressing the problems we identified on our electric grid.”

“SB3 includes substantive reforms that will ensure that Texas’ grid is stable for decades to come,” Patrick said in a statement. “The proposed changes in SB3 will revolutionize Texas’ prevention and preparation strategies for any energy emergencies we encounter going forward.”

The bill has been sent to the House of Representatives for its consideration, where it could advance unchanged to Gov. Greg Abbott for his signature. If the House amends the bill, each chamber will then vote on whether to accept the amendments or request a conference committee to hammer out the differences between the two versions.

House Passes Grid-focused Bills

The House on Tuesday approved six bills designed to “strengthen the state’s electric grid,” including one that would restructure ERCOT’s Board of Directors.

HB10, authored by State Affairs Committee Chair Chris Paddie (R), would replace the five independent directors unaffiliated with any market participants with three appointees by the governor and one each appointed by the lieutenant governor and the House speaker. All board members would have to be Texas residents and would not be compensated beyond travel and other necessary expenses.

The bill would not change the rest of the board’s makeup. An amendment to require residency within the ERCOT region, which covers 90% of the state, was withdrawn.

PUC governance and other issues will be addressed in other bills still pending, Paddie said during discussions over proposed amendments.

The bill was approved 140-0.

Other approved legislation included:

• HB11: would require the PUC to mandate each generator and each transmission and distribution provider to weatherize their facilities and ensure a prompt return to service.
• HB12: would authorize the Texas Division of Emergency Management to establish a statewide disaster alert system, including the use of languages other than English.
• HB13: would create a new Texas Energy Disaster Reliability Council comprising senior-level representation from the PUC, ERCOT, the TDEM and the Texas Railroad Commission.
• HB16: would prohibit retail electric providers from offering wholesale index rate plans like those of Griddy, which resulted in five-figure bills for some residential customers.
• HB17: would stipulate that no political subdivision may adopt any measure to directly or indirectly limit or prohibit utility service based on the type or source of energy to be delivered to the end-use customer. Gas utilities have been pushing this bill in response to efforts by some cities outside Texas to adopt rules encouraging the construction of all-electric homes.

The State Affairs Committee is scheduled to hear a number of additional bills Thursday, including one related to the restructuring of certain utility providers and several on cybersecurity issues.

HB3749, relating to the provision of electric service during extreme weather conditions, was to include the Berkshire Hathaway Energy proposal to build 10 GW of gas generation for $8.3 billion. The bill will be pulled until next week, according to late word from the capitol. (See Berkshire Hathaway Offers Texas Emergency Power Supply.)

The Texas Coalition for Affordable Power, a nonprofit that helps cities aggregate their power needs, counts more than 400 separate pieces of legislation relating to energy or utility matters now under consideration in Austin. That’s about three to four times the number the organization would expect to see during more typical legislative sessions, it said.

PUC Names Enforcement Lead

The PUC said Tuesday it has named Davida Dwyer to lead the agency’s enforcement efforts as part of its “ongoing focus” on enforcement. Dwyer, who has 13 years of PUC experience, will serve as deputy director of the legal division.

The commission last year moved the enforcement function into legal to increase the resources available to enforcement, Executive Director Thomas Gleeson said. Lawmakers in recent weeks have criticized the PUC’s inability to enforce its oversight of the ERCOT market.

“A vital function like enforcement demands a leader of Davida’s integrity, tenacity and experience. We’re fortunate to have her on our team,” Gleeson said.

Dwyer has spent 13 years with the PUC, during which she has advised former Commissioners Barry Smitherman, Kenneth Anderson and Shelly Botkin.