Texas Californias Its Energy Grid and Buffett May Benefit
The state that supposedly jealously guards its free market in electricity generation is proposing socialized capacity payments for backup gas generation that would sit idle most of the time.
Texas has an expensive backup plan to keep its energy grid from failing.
Photographer: John Weast/Getty Images
Austin doesn’t want anyone to California their Texas — except when it comes to the latest stab at energy policy, which wouldn’t look entirely out of place in Sacramento. It is also, to be clear, a layer-cake of travesty.
The Republican-controlled Texas state senate just passed SB 6, which would establish something called the “Texas Energy Insurance Program” but might more accurately be called the “Texas Gas Giveaway.” Tracing its roots to the disastrous winter storm and blackouts of early 2021, this bill would authorize taxpayer funds or levies on customer bills — which in practice amount to pretty much the same thing — to pay for up to 10 gigawatts of new natural gas-fired power plants to sit in reserve. If the grid looked like it might fail, the operator could then tap these so-called peaker plants to avert disaster. Unlike regular power plants in Texas, which make money on swings in wholesale electricity prices, these would earn a regulated return, more like a piece of the grid.