October 1, 2014
Texas

New law would bring dramatic changes to the Texas electricity grid

By JAMES OSBORNE, Staff Writer | Dallas Morning News | 30 September 2014 | www.dallasnews.com

Coal plants would close. The electricity grid would shift radically to natural gas. And Texas’ already sizable wind power industry would have to more than double.

In two days of hearings before the House Environmental Regulation Committee in Austin on a pending federal law to cut carbon dioxide emissions from power plants, officials described a future electricity industry vastly different from its present form.

Warren Lasher, director of system planning for the Electric Reliability Council of Texas, said he expected a significant reduction in coal plants operating in the state.

The most immediate impact from efforts to reduce global warming would be on smaller municipally owned power operations that are dependent on coal and face huge costs to upgrade their operations.

“We’re a nonprofit,” said Bob Kahn, general manager of the Texas Municipal Power Agency, which serves Bryan, Denton, Garland and Greenville. “We’ve done the math, and it’s going to cost us $80 million a year to comply. If this goes into effect, we’d basically have to shut down.”

Texas hasn’t decided if it will implement the law or defy it. But were it to make the changes, the massive job would fall largely on the Texas Commission on Environmental Quality and the Public Utility Commission.

Both agencies predicted dire outcomes. PUC Chairman Donna Nelson called the law an “overwhelming threat” to Texas power prices and the reliability of the power grid.

But environmentalists and the wind and solar power industries argued that the state was already well on its way to meeting the 2030 goals and the price increases would be minimal.

“Industry always says rules are going to cost a lot of money,” said Cyrus Reed, conservation director of the Texas chapter of the Sierra Club. “Look at the [list of power plants being planned]. Not all of those will get built. But clearly the market is going towards natural gas and renewables.”

Those battle lines were drawn almost as soon as the Environmental Protection Agency announced the law in June. Most expect the rule to be adjusted before it becomes final next summer.

But pressure is intensifying on state officials on whether to create a plan to meet the goal and avoid an EPA takeover.

The power industry has been hesitant to push that goal too forcefully. But Tuesday, Clifton Karnei, general manager of the Brazos Electric Power Cooperative in Waco, which accounts for 5 percent of the state’s power grid, bluntly urged lawmakers to move.

“It would be better than anything we’d get from the federal government,” he said. “But we’re going to have to make some tough decisions.”

But there is a school of legal thought that submitting compliance plans amounts to states ceding authority to the federal government – a contentious issue since the early days of the country.

And lobbyists for industrial and manufacturing companies have been quick to warn Texas of the consequences if dire predictions about power prices come true.

“The industrial expansion on the Gulf Coast, the renaissance in the manufacturing sector and high tech in North Texas, that profile changes completely,” said Phillip Oldham, an attorney representing the Texas Association of Manufacturers.