Major energy consumers will face new limits if Texas House approves proposal

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ODESSA — A Texas House panel approved a bill that changes how industrial energy consumers coordinate their operations with the state’s electric grid manager and providers last week.

It now heads to the full chamber with modifications. The House committee made changes after trade groups and power generators said the original bill approved by the state Senate was too aggressive on the state’s open-energy market.

Most changes to the bill were minor, leaving the overall intent of the proposal intact.

Written by state Sen. Phil King, R-Weatherford, Senate Bill 6 aims to help the Electric Reliability Council of Texas, the main grid operator, better understand the state’s energy needs. King has said he believes the state’s electricity providers are passing on costs to consumers for beefing up the grid that isn’t needed.

If the bill becomes law, companies that bypass the grid and get power from power generators directly need to report certain information about such business arrangements and follow new regulatory rules set by ERCOT and the Public Utility Commission, including lending their power in an emergency. ERCOT will also have the ability to shut off a facility’s power during emergencies with notice, a provision that some groups say endangers their operations. Groups also said that relying on back-up generators could lead to federal air emissions violations.

A week before lawmakers approved the bill, business groups said the bill could hinder the Texas economy.

“The ability to sign a long-term purchase power agreement with these data centers, this is the light at the end of the tunnel we’ve been looking for,” Walt Baum, president of Powering Texans, a group representing natural gas generators, said at the hearing. “And we worry that some of these new … processes or approvals could be the train that slams the door shut.”

In a statement to The Texas Tribune after the bill was passed, Baum said the group was still reviewing the bill.

“We hope to continue to work with legislators to ensure Texas can continue to encourage data center investment in Texas,” he said.

Here are some of the key changes to the bill.

Quicker electricity, but there’s a catch

The bill says ERCOT will prioritize requests for electricity from companies that agree to allow grid operators to lessen the amount they consume when the grid needs the power.

If an industrial company wants to do business in Texas and tap into the grid, it needs to wait for ERCOT to approve its request and provide it with information about the power it plans to use. ERCOT uses that information to predict how much electricity it will need to deploy. And how much infrastructure will be necessary. Current forecasts expect the load to almost double.

The utility commission could penalize any companies that fail to reduce their demand under these terms.

These proposals stem from a bill introduced by state Rep. Drew Darby, R-San Angelo, who proposed faster electricity for companies agreeing to have their power cut. It was not in King’s original bill.

No confidential information needed

The previous version of the bill asked companies seeking to plug into the Texas power grid to let operators know if they had been waiting for similar connections elsewhere in the state or country. The latest version no longer requires any out-of-state applications for electricity.

The application can also “withhold or anonymize” sensitive proprietary details.

Kill switch

A particularly controversial provision authorizing ERCOT to shut off a company’s power during an emergency remained in the bill with few changes. Grid managers must now specify the periods they plan to activate such measures and issue a 24-hour notice.

Direct-to-consumer

Companies can draw up deals with power generators to get electricity directly from them without needing to access the grid. According to the bill, ERCOT can propose conditions on those arrangements, which some groups have called discriminatory. In the previous version of the bill, those conditions would have been up to the utility commission.

The bill would also require that electricity to be available for the grid during emergencies.

Back-up electricity

An earlier version of the bill would have allowed ERCOT to shut off energy to any industrial company with little notice. Now, however, it must first use every available measure at its disposal to meet demand when it spikes, according to the latest version of the bill. Companies would need to inform grid managers if their backup generators can meet half of their electricity needs, and use them when ERCOT shuts their main power down.

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