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Texas Homeowner's to See More Rate Increases After New Bill Passed

Updated: Jun 8, 2023



The severe winter storm that struck Texas in February 2021 not only strained but severely damaged the state's electricity grid, leading to the necessary disconnection of power to millions of households and businesses in order to prevent a complete grid failure. Tragically, at least 200 individuals lost their lives, with many succumbing to hypothermia and others experiencing carbon monoxide poisoning.


In the aftermath of this crisis, state legislators took action by directing the Public Utility Commission (PUC), the governing body responsible for overseeing Texas' electricity system, to ensure that power generators fortified their infrastructure to withstand extreme weather conditions. These facilities have since undergone weatherization measures. Additionally, the legislators instructed the PUC to explore solutions for maintaining electricity supply during periods of low wind and solar energy production.


As part of these efforts, regulatory authorities proposed a significant change to the functioning of the electricity market in January. Termed the "performance credit mechanism," the proposal received unanimous approval from the PUC. Under this controversial initiative, electricity providers—comprising companies, cooperatives, and municipal utilities responsible for selling power to consumers—would be required to pay extra fees to generators that commit to supplying electricity during times of grid strain. The associated costs could potentially be passed on to consumers.


The proposal's efficacy in enhancing grid reliability remains a subject of extensive debate. Notably, economists appointed by regulators to monitor the market do not endorse this idea. Similarly, environmental and consumer advocates, oil and gas producers, and high-volume electricity users all oppose the proposal.


Critics argue that implementing an untested and inadequately analyzed plan poses significant risks. In December, members of the Senate Committee on Business and Commerce expressed their "substantial concern" regarding the proposal's viability in a letter addressed to the PUC.


Following the PUC's decision, State Senator Charles Schwertner, a representative from Georgetown, voiced his discontent on Twitter, claiming that "the ruling significantly deviated from the original legislative intent of the 2021 bill aimed at grid restoration."


An independent consultant working with the PUC estimated that the credits associated with the proposal could cost retailers approximately $5.7 billion annually. However, they noted that this expense might be partially offset by a general reduction in energy costs. Nevertheless, experts maintain that the plan would likely result in increased consumer bills, although there is disagreement regarding the extent of the potential rise.


Recognizing these advantages, many Texas homeowners are actively exploring the installation of solar panels on their properties as a means to navigate the impending electric rate increases. By embracing solar energy, they can secure a reliable and sustainable power source, reduce their dependence on the grid, and potentially enjoy significant long-term savings on their electricity bills.

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