Texas renewable standard survives bumpy session for enviro groups 

Source: Edward Klump, E&E reporter • Posted: Thursday, June 4, 2015

As Texas’ 2015 regular legislative session wrapped up this week, advocates for wind and solar power began to exhale.

The state’s renewable energy standard and a related credit program survived, as did the Competitive Renewable Energy Zone (CREZ) initiative that has helped link remote power projects to cities through about $7 billion in infrastructure spending.

Backers of the status quo say ending the programs would have sent a bad message, even as others question the incentives. State lawmakers also didn’t pass legislation that would have barred potential work on U.S. EPA’s proposed Clean Power Plan, which aims to reduce carbon dioxide emissions from power plants.

“We are pleased that the policy framework that existed before the legislative session, which is helping us to advance our clean energy goals in the state, is largely intact,” said John Hall, Texas director of clean energy for the Environmental Defense Fund.

Still, the mood was mixed among Hall and other environmental advocates. Cyrus Reed, conservation director at the Sierra Club’s Lone Star Chapter, said he was “extremely disheartened and disappointed” by two energy bills that made it through.

One, H.B. 40, is intended to limit cities’ ability to regulate the oil and gas industry through avenues such as hydraulic fracturing bans (EnergyWire, May 19). Another, S.B. 709, would undermine participation in certain environmental permit proceedings, according to Reed.

Also passed was H.B. 1794. Luke Metzger, director of Environment Texas, used a blog post to label that a bad bill because it would limit the penalties cities can recover in litigation over environmental pollution. Metzger also lamented that a measure to continue an electric car rebate program fizzled.

But Reed said electricity legislation generally turned out OK during the session.

“There weren’t any bills passed that hurt either energy efficiency or renewables, and there were a few that … should help renewables,” Reed said.

The session also produced a mixed bag for the Texas Public Policy Foundation (TPPF), a nonprofit research institute that has been critical of what it calls subsidies for renewable energy.

The group was pleased to see limits on local fracturing bans, as well as moves to bring more oversight to new grid connection proposals and certain municipal utility transmission projects. But TPPF expressed disappointment on no passage of bills to oppose the Clean Power Plan or to end Texas renewable energy programs.

It was “sad to me that the Legislature didn’t stand up for consumers and take a stand against corporate subsidies,” Bill Peacock, vice president of research at TPPF, said about renewable programs he described as costing millions of dollars a year.

The legislative session began Jan. 13 and officially ended Monday, with another regular session not scheduled until 2017.

John Fainter, president of the Association of Electric Companies of Texas, said his group spent a good deal of time playing defense in a rather routine session and was neutral on the renewable policy bill.

“We kind of like it when there’s not a whole, big, major concentration on our business,” he said. “We like that a whole lot better than the other way around.”

Bills that passed

Although his bill to end the renewable standard failed, Sen. Troy Fraser (R) sponsored several electricity measures that passed this session, including one to enable the PUC to have counsel on certain federal proceedings. He also was behind a bill that calls for state oversight of municipal utilities on transmission projects outside their service areas.

Then there was S.B. 933, which would let the PUC review new large connections to the grid managed by the Electric Reliability Council of Texas, or ERCOT. That bill passed and would affect a project such as Tres Amigas, which proposes to connect Texas’ main grid with the West.

“We’re pretty proud of the package that made it through the process,” said Will McAdams, legislative director for Fraser.

Phil Harris, CEO of Tres Amigas, said the legislative move could be helpful for his project.

“The more clarity, the better,” Harris said. “We want everybody to be very comfortable and knowledgeable of exactly what the deal is.”

Previously, a Pattern Energy official speaking on behalf of the Southern Cross project, which would connect to the East, expressed concern about how a state review could conflict with approval from the Federal Energy Regulatory Commission. In the end, language was carved out for Southern Cross.

Under the revised bill, the PUC will have 185 days after a Southern Cross filing to grant an approval with any reasonable conditions as it looks at the public interest.

Fainter said it was “appropriate” to have PUC review of new connections to ERCOT’s grid. He also supported a bill that aims to reduce some regulatory lag for utilities in Texas that are outside ERCOT’s region.

As for the somewhat controversial S.B. 709, Fainter said it could help the industry in the future by quickening the permitting pace while not denying someone a contested case.

“It’s gotten to be where it was used as a tool to kill projects rather than to make sure that they were in compliance with all of the appropriate environmental rules,” he said.

Another measure that passed is intended to make sure money for low-income assistance on electricity bills is used for that purpose. A separate bill seeks to update building codes, while another calls for further study of possible rate adjustments for utilities.

A plan to let homeowners install solar in some developments that aren’t yet completed also passed.

Clean Power Plan bills among measures that died

Perhaps the most closely watched electricity bill among environmental groups was S.B. 931, which would have ended the renewable energy standard and CREZ program while allowing parties to continue using renewable energy credits.

The bill made it through the Senate before stalling in a House of Representatives committee, and it wasn’t included in other legislation that was sent to the governor.

The state’s current standard expected 5,880 megawatts of renewable energy by the start of this year. By the start of 2025, the target is 10,000 MW. Both have been surpassed already, but advocates have said some renewable energy credits have remained linked to the state’s goals.

McAdams, who works in Fraser’s office, declined to discuss future plans on the topic after the bill’s demise.

Fraser announced in a letter yesterday that he won’t seek re-election. He is known in part for his work on 1999’s S.B. 7, which began a process of injecting competition into much of Texas’ power market. The senator noted various accomplishments in his letter as well as an opportunity to let others “leave their mark.”

David Power, deputy director of Public Citizen’s Texas office, said combating the repeal of the renewable standard and CREZ program involved “a huge amount of effort by a very large number of people.” The goal, he said, is to keep tools available for the PUC for new infrastructure while not undermining Texas’ market for renewable energy credits.

Other bills that withered this session included a proposal to end minimum-use fees from electric retailers, as well as a measure to promote demand response. A plan for a residential energy efficiency loan program also didn’t reach the governor’s desk.

A proposal to allow some potential competition in Austin’s municipal electric setup didn’t survive, and a bill intended to ban regulators from adopting a capacity market approach didn’t get out of a House committee.

The capacity market discussion, which could involve payments to generators regardless of the volumes needed, has occurred back and forth in Texas in recent years. There appears to be no momentum to carry a change forward, but talk percolates that it could be revived at some point.

There’s also the battery storage plan promoted earlier by Oncor Electric Delivery Co. No bill moved the issue forward this session, but the company has indicated it may resurface in future years.

Some bills on climate change likely never were going anywhere this year, but Rep. Rafael Anchia (D) gave the issue time for committee discussion during the session (EnergyWire, April 20).

Ultimately, measures to bar Texas from complying with EPA’s Clean Power Plan, as well as to look at implementing it, stalled.

Leigh Thompson, a policy analyst with the Armstrong Center for Energy and the Environment at TPPF, said she would like to have seen legislation against the carbon plan, but she understood some lawmakers sought a wait-and-see approach.

A number of Texas leaders have expressed deep concern with the EPA proposal, and Attorney General Ken Paxton has suggested his office will pursue litigation once there’s a final carbon rule.

But Hall, who’s with the Environmental Defense Fund, said he believes state regulators will be urged to put together a plan so EPA doesn’t step in to create one. He said Texas is poised to benefit from its potential in wind, natural gas and solar.

“We are optimistic that Texas is positioned to not only be the leader in the country with regard to the production of oil and gas, but also the vast clean energy resources we have in this state,” Hall said.