The Senate on Tuesday approved legislation that would close the book on two programs that helped fuel the state’s years-long surge in wind energy production.
With a 21-10 vote, the chamber sent Sen. Troy Fraser’s proposal, Senate Bill 931, to House lawmakers. It would end the Renewable Portfolio Standard, which established a state renewable energy goal. It would also close Texas' Competitive Renewable Energy Zone (CREZ) initiative, a power line program that sparked huge investments in wind energy.
The proposal has angered environmentalists and renewable energy industry groups. But Fraser, R-Horseshoe Bay, has said his effort is merely intended to declare "mission accomplished."
That’s because Texas long ago surpassed its renewable energy goal, and most of the $7 billion CREZ program – which regulators used to build power lines to connect windy West Texas to large electricity-hungry cities in the east – was completed in December.
Texas manufacturers and free market think tanks are among those who support the legislation, saying the two programs gave renewable energy a leg up that it no longer needs.
But advocates for renewable energy say the changes would shake the industry’s confidence in Texas’ business climate. Also, with federal climate regulations looming, critics say the legislation would take away an option Texas might tap to meet its proposed carbon goal.
“Today Sen. Troy Fraser snatched defeat from the jaws of victory,” Tom “Smitty” Smith, director of the Texas office of the consumer safety group Public Citizen, said in a statement on Tuesday. "Since renewable energy is the least expensive way to reduce climate pollution, it could have been an important tool in our efforts to comply with pending federal rules."
The bill has no companion in the House, so it will need a sponsor and committee assignment to advance further.
Texas first adopted its Renewable Portfolio Standard in 1999, and it increased its goal in 2005 – with legislation Fraser authored. With help from a mix of state and federal policies and changing economics, Texas has shattered its goal of developing 5,880 megawatts of renewable energy by 2015, and even surpassed a nonbinding target of 10,000 megawatts by 2025.
The state now leads the nation in total wind energy production – by far. On average, a megawatt of solar energy can power as many as 100 Texas homes on the hottest summer days. During average temperatures, it can power many times more.
By halting the two programs, Texas would no longer require generators to participate in its renewable energy credit trading scheme – a program that helped regulators track new generation and ensure the state would meet its goal. That program would only continue voluntarily.
Credits under the program are already cheap, and would likely lose value under the shift. Renewable energy advocates worry that would change the economics of building new wind and solar generation in Texas, perhaps even for companies that were planning to build under the old rules.
“The state made commitments to these projects,” Charlie Hemmeline, executive director of the Texas Solar Power Association, said last month at a committee hearing. “Increasing uncertainty for our industry raises the cost of doing business in Texas.”
Fraser has said the change shouldn’t matter much, because the credits never gained much value as other factors helped jump-start the state's industry.
Ending the CREZ program would mean that the Public Utility Commission, the state's energy regulator, would lose some authority to approve large transmission line projects – power the Legislature gave that panel to more quickly complete the $7 billion project.
“It’s sending a message to PUC: If you want to build more CREZ lines, come back and ask the Legislature for permission,” Fraser said last month.
Not that the commission planned to keep using that power without asking.
“Our current commissioners feel that process is done,” Brian Lloyd, the PUC's executive director, testified at last month's hearing.
Regardless of whether the legislation would stymie investment in renewable energy, critics question why lawmakers would end the program as Texas is mulling how it will respond to the Obama administration's proposed "Clean Power Plan," which would require Texas to cut close to 200 billion pounds of carbon dioxide in the next two decades however it sees fit.
Environmental groups suggest that the Renewable Portfolio Standard and CREZ programs could play a role in the state's response.
“The Senate’s action takes that tool out of the state’s toolbox," Smith said. "We call on the House to reject this short-sighted decision."