Sierra Club
Sierra Club Press Release

For Immediate Release:
Friday, June 1, 2012

Contact:
Cyrus Reed, Sierra Club, 512-740-4086; cyrus.reed@sierraclub.org

 Report Finds Proposed Increase to Electricity Prices Will Not Solve Texas’s Power Needs  Sierra Club Says Energy Efficiency, Clean Energy and Other Options Still Better for Texans 

Austin, TX -- Today, the Electric Reliability Council of Texas (ERCOT) released a report by the Brattle Group looking at investment possibilities for new electrical generation in Texas. The report explains the effects of ERCOT proposed changes to the structure of the Texas energy market, as well as additional policy options. Some of the changes that ERCOT and the Public Utility Council (PUC) have been considering include raising the maximum price that a generator can bid for one megawatt hour of energy from $3,000 to as much as $9,000. 1 megawatt hour is enough energy to power about 1000 homes for one hour. The plan has drawn harsh criticism from some strange bedfellows, including the Sierra Club, the Cities of Austin and Houston, the Office of Public Utility Council, a coalition of retail electric providers, large industrial customers and the South Texas Electric Cooperative.  These groups and cities have all publicly opposed a plan by the Public Utility Commission (PUC) to allow electric power producers to raise the cost of energy beginning in August. The PUC see these price hikes as a method to spur more electrical generation from natural gas and coal-fired power plants.

 "Texans shouldn’t take the bait, this is worst possible time to put an extra burden on our families’ wallets," said Cyrus Reed, Conservation Director of the Lone Star Chapter of the Sierra Club. "Instead of using our money to build more coal and gas plants, the PUC should implement their rules proposed to raise energy efficiency goals, goals which will reduce the demand for electricity and decrease our electric bills. It’s also time they start investing in the future of the Texas economy and approve rules that would require at least 500 MWs (about 400,000 homes worth) of renewable energy from resources other than wind be installed by 2015."

In comments submitted last month to the Public Utility Commission (PUC), the Lone Star Chapter of the Sierra Club told the Commission to choose faster, easier, and more cost-effective options.
The proposal by PUC to raise the maximum bid from $3,000 up to $9,000 for one megawatt hour could put the squeeze on the average Texan’s wallet, costing a household an additional $480 a year in electricity cost. An independent analysis performed on behalf of ERCOT found that raising the maximum cost of one megawatt to $4,500 would raise overall electricity prices by some $15 per month on the average homeowner's bill, while PUC’s second proposal to raise the maximum bid to $9,000 by 2015 could raise overall prices by $40 dollars on the average bill.

“Today’s Brattle Group report provides some important information about market prices, investments and generation, but it fails to adequately look at low-cost solutions that are already on the books,” said Reed. “Energy efficiency programs, the potential for 1,000 of megawatts of demand response (alternative ways to meet our electricity demand), and ways to promote clean energy like solar are ways we can ensure the lights stay on while reducing the cost to working Texas families.”

The Brattle Group reports found that even if the price caps were raised to $9,000 per megawatt hour, there would not be enough power added to the energy market to ensure we have the electricity we need in a crisis. This concept, known as a reserve requirement, makes sure that if there is a Hurricane, an extreme heat wave or other energy shortage that Texans can keep their lights on. . The Brattle Group report does state that the Texas energy market could consider different alternatives to its current form which relies solely on electrical generation to meet energy needs as a way to ensure Texans have enough power in a crisis, or when energy demand is at its highest.

Reed noted that the Commission has proposed a rule to implement legislation that requires certain utilities in Texas to meet 30% of the growth in their electrical demand through energy efficiency programs, and that could potentially reduce electrical demand substantially at peak times, like the middle of a hot Texas afternoon in August.



However, the rule has very tough "cost caps", electricity rates that power companies cannot exceed, which certain utilities like El Paso Electric and Texas-New Mexico Power say are so low they cannot meet the goals required by the legislature. 
"Let's give the utilities the flexibility they need to meet their demand and energy savings goals for pennies on the dollar rather than raise prices at certain times by $1,500 or even $6,000, raising everyone's electricity bills," said Reed. “Otherwise, this simply looks like a measure to promote building new power plants for the sake of building new power plants. That’s not the right solution for Texas."

Reed noted that the Sierra Club has hired a national expert to look at potential ways to save additional energy through these utility programs, and that analysis will be released next week.

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A full set of our initial comments can be found at: http://texas.sierraclub.org/press/newsreleases/20120517PUCrateComments.pdf