Grid nightmare haunts Texas governor’s race

By Jason Plautz | 09/19/2022 06:58 AM EDT

Texas Democratic gubernatorial candidate Beto O'Rourke and Texas Republican Gov. Greg Abbott.

Texas Democratic gubernatorial candidate Beto O'Rourke and Texas Republican Gov. Greg Abbott. Brandon Bell/Getty Images (O'Rourke); Brandon Bell/Getty Images (Abbott)

In his bid to turn the Texas governor’s mansion blue, former Rep. Beto O’Rourke has seized on the state’s beleaguered power grid as a reason to oust Republican Gov. Greg Abbott.

The big question — besides whether the underdog Democrat can win — is if O’Rourke or Abbott could help drive a sweeping Texas grid overhaul. Experts suggest it’s possible with some determination, although the governor’s direct power is somewhat limited.

O’Rourke has called for major changes as Texas deals with fallout from a prolonged freeze in February 2021 that nearly took down its main grid and left millions of people without power. Winter Storm Uri was linked to more than 240 deaths in the state. Texas’ growing population is another reason critics say grid improvements must happen, especially for periods of hot or cold weather.

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“Initially, people may not have attributed responsibility for the power failures to the governor. But they judge the response and the claims to have solved it or at least resolved it,” said Cal Jillson, a professor of political science at Southern Methodist University. “If it were to happen again, it would be more directly on the governor.”

The power crisis created an opening for an O’Rourke challenge in the race, according to Jillson. And while electricity may not be the top issue for voters compared to social issues and inflation, it is one that has become more tied to the governor’s office. Surging electricity rates associated with higher prices for natural gas — a key fuel — and costs for maintaining the grid have kept the issue top of mind for many voters.

A Real Clear Politics average of polls shows Abbott with an average lead of 7.3 percentage points, although O’Rourke has been closer in some recent surveys. The election is scheduled for November.

O’Rourke has hammered Abbott for months over the management of the grid. In response to a conservation warning ahead of a May heat wave, he wrote on Twitter that “the governor of the 9th largest economy on earth – the energy capital of the world – can’t guarantee the power will stay on tomorrow.”

O’Rourke’s website promises to “redesign the power grid to prioritize Texas families, not wealthy energy corporations.” He also pledges a robust plan that includes more investment in renewable energy, weatherization to shore up the grid from future storms and connecting Texas’ main grid to other states.

Abbott, along with Lt. Gov. Dan Patrick (R), endorsed legislation to reform the Electric Reliability Council of Texas (ERCOT) and better prepare for extreme weather in the aftermath of Uri, work that is likely to continue in next year’s legislative session. The governor’s office has touted the fact that lights stayed on this summer even as demand skyrocketed amid high heat.

Whether Abbott or O’Rourke can carry through their campaign promises hinges on a complicating factor: Texas’ state constitution lays out a relatively weak governorship.

Major market changes happen through the state Public Utility Commission (PUC) and ERCOT, which manages most of the state’s electric load.

State legislators may also continue to act on market reforms started in the aftermath of the February 2021 winter storm, including acting on recommendations from a panel appointed in part by Abbott and Patrick.

But the state’s lieutenant governor controls the state Senate and is often seen as a more impactful force in the Legislature. Democrat Mike Collier faces Patrick for that position, which is elected separately from the governor.

Karl Rábago, who served on the Texas PUC from 1992 to 1995, said governors can most directly exert their power through appointments to the PUC — even if those commissioners are meant to stay neutral after being appointed.

“I come from an era where the political operatives didn’t mess with us,” he said.

Still, Rábago added, a more hands-on governor can nudge commissioners and use the bully pulpit to push for a certain energy agenda. An August investigation by The Texas Tribune found that Abbott has exerted an unusual amount of control over energy policy, including influencing ERCOT communications and weighing in on the search for a new ERCOT CEO. That search concluded last month with the selection of Pablo Vegas from NiSource Inc. (Energywire, Aug. 17).

Meanwhile, clean energy advocates have said O’Rourke’s championing of renewables and a less isolated grid could help change the conversation in Texas, even if his direct power is limited.

“We still have a ways to go to get leadership that embraces the energy future of Texas in a realistic way,” said Texas state Rep. Donna Howard (D), who serves on a committee overseeing energy issues. “I don’t think we have that with our current leadership, who continues to find fault with renewables rather than looking at the godsend that renewables are to Texas.”

Howard pointed to Abbott’s statements after Uri blaming the intermittency of wind and solar energy for the power failures in the immediate aftermath of the storm. Independent reports found that all types of power plants did not operate at expected levels, but natural gas-fueled generation had the biggest and most impactful issues.

But in a sign of the growth of renewables both economically and politically, Abbott has made sure to mention that Texas is the nation’s top wind power producer, launching a campaign video that prominently features a wind turbine and rows of solar panels.

Abbott has also emphasized ERCOT’s success in keeping the lights on despite record-setting demand this summer amid multiple heat waves. He even appeared with ERCOT officials in early September to release the operator’s fall forecast, which projected there would not be any grid problems in the typically calm shoulder season.

“The State of Texas continues to monitor the reliability of our electric grid, and I thank ERCOT and PUC for their hard work to implement bipartisan reforms we passed last year and for their proactive leadership to ensure our grid is stronger than ever before,” Abbott said in a release.

The campaigns did not respond to questions before press time.

Eyeing an overhaul

In the aftermath of Uri, Texas’ Legislature passed changes designed to stabilize the Texas grid, including requirements that power generators weatherize equipment. There also were adjustments to the membership of the ERCOT board as well as an expansion of the PUC from three to five governor-appointed members.

State lawmakers are poised to bring up more grid legislation next year, which could lay out the kind of sweeping changes that O’Rourke has proposed. Howard said she is already working with members on both sides of the aisle to discuss grid legislation that could make clean energy more attractive.

At the same time, another legislative framework has emerged from a report put out this month by the State Energy Plan Advisory Committee, a 12-member body authorized by the state legislature to study Texas’ energy transition. Abbott and Patrick each appointed four members of the committee, operated through the Lower Colorado River Authority (LCRA). The other members were nominated by Texas House Speaker Dade Phelan (R).

That report detailed potential reliability problems from adding wind and solar generation to the grid and called for new renewable resources to “firm their deliveries with other dispatchable generation technologies.”

It also said the committee “does not support a market design that favors new or subsidized generation over existing resources,” saying it would create regulatory inefficiencies and raise capital costs.

In essence, the recommendations would largely favor existing coal, gas and nuclear infrastructure.

Appearing before a Texas House committee in September, John Miri, LCRA’s chief administrative officer, said the committee “did not want to discriminate against one source or another” but emphasized “we need more dispatchable generation to account for the renewables” coming online.

The committee, which only had one member representing renewable energy interests, was criticized for only holding two public hearings and voting on material that had not been previously released. It’s unclear how the nonbinding recommendations would be incorporated into future legislation or even if they represent Abbott’s and Patrick’s preferred positions.

The legislative discussion also comes as the PUC is exploring its own wide-ranging market reform designed to improve reliability and keep power intact during extreme weather events.

At the September Texas House hearing, PUC Chair Peter Lake — who was appointed by Abbott — said outside consultants are expected to submit a proposal this fall that would be presented to the public and lawmakers sometime in early 2023. That would separate the market reform from the gubernatorial race.

It’s unclear what the market reform would entail; Lake said, “We’ve got a line of sight on dramatically improving reliability at a very reasonable cost to the consumer.” One idea that has been discussed is requiring power providers to purchase reliable supply, which could mean paying generators to be on standby or including other incentives to boost reliability.

Another often-discussed idea — one that O’Rourke has highlighted — is to connect ERCOT more to the grids in other states, which would allow the Texas grid operator to draw power in times of need or export it for profit.

Republicans have been cool to the idea since it would likely increase federal oversight, making it a potential nonstarter no matter who is in the statehouse.

However, Texas-based clean energy attorney Michael Jewell said more connections may happen anyway if the market moves in that direction.

“From my perspective, it doesn’t have to be a political issue, people are already working on it,” Jewell said, adding that a clean energy expansion and energy efficiency upgrades are also likely to accelerate because of market forces.

‘An encouraging sign’

The PUC is also exploring smaller changes like encouraging energy efficiency and a closely watched proposal to allow distributed resources like batteries to play a larger role on the grid (Energywire, June 14).

Doug Lewin, an energy analyst and president of Stoic Energy Consulting, said the governor’s priorities can influence those discussions and that he’d expect a commission under a Democratic governor to think more about clean energy.

“Will the rules be set up to make a lot of extra payments for very old fossil plant capacity, or will they be more future-oriented in looking at battery storage, offshore wind and connections to the larger grid?” Lewin said. “The governor, if he so chooses, can have an impact on that, and for the foreseeable future, you’d assume the governor would want to engage.”

Voters have shown that they care about the grid. An August poll from the University of Texas, Tyler, and The Dallas Morning News found that 60 percent of voters had “not too much” or “no confidence” that the electric grid was prepared to avoid blackouts, including 56 percent of Democrats surveyed. Some 41 percent of Republicans polled shared the sentiment.

O’Rourke’s embrace of that discomfort — coupled with enthusiasm for moving to a grid built on renewable energy and energy storage — could help keep the reform debate in the spotlight in Austin. The grid has been elevated from a wonky policy issue to a central issue in the governor’s race and is likely to stay that way, said Rábago.

“Beto saying we can always be energy leaders while we’re looking to new technology and making sure we avoid these disastrous outcomes — to my mind, that’s a wise political strategy,” said Rábago. “It seems to me he’s looking at the long game while also keeping his eyes on the practical, kitchen-table realities.”

Judd Messer, Texas vice president for the Advanced Power Alliance, said the boom in solar energy and wind is proof that the market is already moving in a more sustainable direction.

Renewables accounted for roughly a quarter of the state’s net electricity power production in 2021, according to the Energy Information Administration and more than 80 percent of ERCOT’s interconnection queue is new solar and wind projects.

Regardless of who wins the race for governor, Messer said, Texas’ grid reform will plow ahead.

“You’re seeing both candidates discussing the grid and taking it pretty seriously,” Messer said. “I mean this earnestly: I genuinely think these issues are nonpartisan. Abbott brags about how Texas is leading on energy and he mentions wind right there. To me, that’s an encouraging sign.”

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