Texans must speak out to avoid higher electricity prices

(Originally published in the Austin Journal - October 19, 2021)

As Texas politicians and regulators continue their endless debate about how to fix the problems that led to one of the worst blackouts in U.S. history, they might pause for a moment to consider Ockham’s razor.

Named after medieval theologian William of Ockham, Ockham’s razor tells us that the simplest explanation is usually the best one. Applying this to the Texas electricity grid, the simplest explanation for the cause of the blackouts is that the only resource that can never be counted on to reliably generate electricity—renewable energy—ought to be the top focus.

Unfortunately, that is not the case. Instead, the preferred solution seems to be making sure that Texans pay even more of their hard-earned money to fill the coffers of the major corporations, cities, and other special interests who own, operate, and supply the Texas electric grid.

Let’s go back to February for just a moment. As record snowfalls and temperatures settled in over the weekend of February 12, it was obvious to anyone in Texas that they were experiencing a once in a lifetime event.

This being the case, Texas should have expected problems due to the cold. Yet policymakers and the media cannot stop using the problems caused by the cold to avoid looking at the reliability problems caused by renewable energy.

The Houston Chronicle recently ran a column noting that a Federal Energy Regulatory Commission (FERC) report gave renewables a pass and instead put the blame on lack of winterization.

“Some political leaders used the crisis to bash renewable energy, blaming wind and solar power for the failure of the grid,” said FERC Chairman Rich Glick. “Well, [this] report makes it clear that the facts just don’t support this rhetoric. … [A]ll types of generation, including natural gas, coal, nuclear and wind, experienced problems due to the extreme cold and they all should have winterized facilities.”

Following this line of reasoning, Texas policymakers are proposing changes to the system based on the idea that giving more money to grid operators and generators is the way to make the grid’s reliability problems go away. They need to spend more money on winterization. Or on guaranteed backup generation. Or on, well, you name it. If the solution costs Texans more money, it can be part of the market redesign.

The latest example of this is the decision by commissioners at the Public Utility Commission of Texas—appointed by Gov. Greg Abbott and backed by key leaders in the Texas House of Representatives--to broaden the eligibility of companies to use state-backed “securitization” to ease their losses from the winter storm.

“Winners do not need a bailout,” said Texas Lt. Gov. Dan Patrick. This plan “was never intended to assist those companies who profited during the winter storm.”

Unfortunately, the push to benefit big business by making electricity more expensive is nothing new in Texas. Over the last 10 years, the average price Texas consumers pay for electricity has increased by 6%. While that may not seem like much, it stands in sharp contrast to the price reductions paid by Texas businesses.

Electricity prices for commercial users dropped 8.4% during the same period. Industrial users are paying 16.7% less for electricity than in 2011. And companies in the transportation sector have experienced a whopping 37.4% reduction in electricity prices.

Why are Texas consumers the only ones paying more?

The key to understanding this is that the use of renewable energy has rapidly increased over this same period.

Electricity generated by wind and solar farms increased from 7% of total output to about 25% this year, reaching as high as 66% in March. Renewable generation is overwhelming the system, even though it cannot be counted on to reliably generate electricity when most needed.

This lack of reliability is imposing great costs on the system. One of those costs is expanding the grid to reach out to find more areas where the wind is blowing. The problem is, where the wind blows is not where most people live. The cost of connecting the two has averaged more than $800 million per year. Another cost is providing backup generation for when the wind is not blowing or the sun is not shining. That costs consumers at least $400 million a year.

Businesses can avoid much of these costs. One way they do this is by getting discount pricing for electricity based on federal subsidies for wind and solar farms. These woke corporations then go around touting their green credentials while their customers are paying more for electricity.

Why are Texans paying more for electricity when businesses have lower costs? William of Ockham would likely suggest that is it because many Texas policymakers are more beholden to big business than to the voters who elected them.

Given this reality, policymakers reforming the grid are likely to give us more renewable energy, higher electricity prices, and a less reliable grid. Unless we listen to Ockham’s wisdom and speak out.

Bill Peacock is the policy director at The Energy Alliance.