REA Response

Prop 7 creates the Texas Energy Fund to support electric generation facilities. By supporting investments in natural gas, Texas can increase affordable and reliable power while strengthening our electric grid.

Texas Prop. 7 to strengthen gas-fired sources on electrical grid

Waco Tribune-Herald, Oct. 10, 2023

Editor’s note: Voters have amended the Texas Constitution 517 times since 1876, and they will get the chance again Nov. 7. This is the seventh of a series of Tribune-Herald articles examining the intention and implications of the 14 amendments on the ballot.

Proposition 7 is the Texas Legislature’s response to the near-failure of the state’s electrical grid in 2021 and increasing statewide electricity demand in the years since.

The constitutional amendment appearing on ballots statewide Nov. 7, along with related legislation, is designed to strengthen the grid by creating a dedicated fund to incentivize upgrades and new construction of dispatchable energy generating facilities. With $5 billion authorized for the next two years, pending voter approval, the fund would provide grants and loans for natural gas-fired generating facilities able to provide power at any time.

Proponents of the amendment said repeated calls for voluntary energy conservation this past summer from the state’s grid operator, the Electric Reliability Council of Texas, show the need to strengthen the grid. The conservation notices came amid record-high electricity demand spurred by both record-setting summer heat and growth in the state’s population.

Opponents of the measure agree the grid needs to be strengthened but want more investments in renewable sources, saying the dispatchable sources targeted by the fund would drive further climate change, cited as a reason for the increasing heat in Texas.

The legislation defines a dispatchable source as a facility whose “output can be controlled primarily by forces under human control,” which in practice is expected to mean natural gas generation. Texas is the largest producer of natural gas in the U.S. and the third largest producer globally.

Senate Joint Resolution 93 puts the proposed amendment on the Nov. 7 ballot, and Senate Bill 2627 lays out the details of the fund, which would be administered by the Public Utility Commission of Texas. If authorized by voters, the fund will receive $5 billion from the state’s general budget, passed as House Bill 1.

By putting the proposition to voters as a constitutional amendment, the fund can be created for use year after year, effectively setting aside money for the continued growth of the state’s electrical grid.

Sen. Charles Schwertner, R-Georgetown, wrote in an analysis for Senate Bill 2627, which he authored, that February 2021’s winter storm revealed failures in Texas’ electricity market, in particular, the reliability of the grid. Schwertner also authored legislation that passed in 2021 as Senate Bill 3 that is meant to strengthen the state’s response to weather emergencies threatening the grid.

Schwertner’s new bill comes after a record-breaking summer in Texas, which saw ERCOT issue repeated warnings for voluntary energy conservation and set an all-time peak demand record of 85,464 megawatts on Aug. 10. The ERCOT grid set 10 all-time peak demand records over the summer, surpassing the previous record set in 2022. Each month this past summer also brought a new monthly peak demand record.

Schwertner said the new fund will create electricity production capacity that can be called on at any time. Schwertner said he wanted to prioritize natural gas production as opposed to renewable sources such as wind or solar because natural gas generators can produce no matter if the wind is blowing or the sun is shining.

“We need better resource adequacy to make sure we have enough electrons to power Texas into the future, so when Texans flip the light switch, the lights come on,” Schwertner said.

The Waco area’s legislators voted in favor of Senate Bill 2627, including Rep. Angelia Orr, R-Itasca; Rep. Charles “Doc” Anderson, R-Waco; and Sen. Brian Birdwell, R-Granbury.

In a statement, Birdwell cited the February 2021 storm as showing major failures in Texas’ electricity market, specifically the lack of sufficient reliable generation capacity.

“While reforms from SB 3 from the 87th Texas Legislature’s Regular Session addressed many critical system issues, there remained a need for increased reliability related specifically to increasing dispatchable generation,” Birdwell said. “This (Proposition 7) is an important step in making sure our energy grid has sufficient and reliable power as our State continues to grow.”

Several corporations and organizations registered in favor of the legislation, including ConocoPhillips Alaska, Koch Companies, the Texas Association of Manufacturers and the Texas Oil and Gas Association.

Texas Oil and Gas Association President Todd Staples said natural gas has been the backbone of Texas’ energy grid and was there to “save the day” this summer during peak energy demands. Based on ERCOT data, Staples said natural gas held up 60% of the grid’s demand.

By placing more investments in natural gas, Staples said the right energy mix will be created to keep the lights on and power Texas into the future by creating more on-demand energy sources. Affordability and reliability would be greatly enhanced through more investments in natural gas, Staples said.

The state needs to prepare for increasing electricity demand because of its steadily increasing population, Staples said. Late last year, Texas hit 30 million residents, nearly doubling in size since 1990, when the population census counted just under 17 million residents.

Beyond the population, growth in industrial activity needs to be accounted for ahead of time, Staples said.

Texas Association of Manufacturers CEO Tony Bennett also said business activity has been a driver of increased electricity use. Despite slight regressions during the 2008-09 recession and the COVID-19 pandemic, Texas’ GDP has steadily risen every year since 2000, topping off at $1.9 trillion last year. If Texas was its own country, it would have the ninth highest GDP in the world.

Power outages could have catastrophic consequences for manufacturers and other industrial operations, Bennett said. In a semiconductor factory, for example, a power outage could ruin entire batches of product, he said.

Bennett said renewable energy sources have their place in the energy market and that ERCOT has done a good job integrating different types of energy into the grid, but dispatchable energy sources need to play a key role. He said they are more reliable than renewable sources and need to be available to back up renewables.

Schwertner similarly said renewable energy has a place in Texas, especially as technology advances. However, he said as of now, there are issues with the reliability of storing renewable energy to be used later, an issue he said dispatchable energy does not have.

Organizations that registered against the legislation include Environment Texas and the Texas Consumer Association. Environment Texas Director Luke Metzger said it is critical for Texas to move away from fossil fuel production due to the impact it has on the environment through air pollution, including greenhouse gas emissions that drive climate change. He said climate change is partially to blame for the record-breaking heat seen in Texas this summer.

Metzger said Texas needs to move toward 100% clean energy, which he said has had an instrumental role in propping up the ERCOT grid this summer.

“This past summer, we saw solar in particular play a critical role in keeping the lights on, even as we had significant outages among gas, coal and nuclear plants,” Metzger said. “Generally this summer the renewables really helped with the grid. So we think that continuing that direction towards 100% clean energy is critical, and that investing in new gas plants is heading in the wrong direction for the state.”

In response to the critics of renewable energy who say they are weather dependent, Metzger said wind and solar energies are complementary. He said the wind is typically stronger at night or during storms, when the sun is not out.

He said by investing more in the many kinds of renewable energy, each energy source can complement the others, creating an interconnected network of clean energy that would not be devastated by a certain type of weather or low wind.

UPDATE: The original version of this story listed Oneok Inc. among organizations opposed to the measure. The company originally registered in opposition but is no longer opposed because of changes made during the legislative process.

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