Austin News

The future of energy policy in America is up for grabs — will the Texas model prevail or will California practices emerge as the preferred method?

That was the focus of a discussion sponsored by the Texas Public Policy Foundation on Jan. 15. Will the California approach, which has enforced renewable mandates that stressed the electric grid, putting its reliability in question, triumph under the Biden administration?

Or will the Texas approach, with subsidies and easy treatment by regulatory agencies to promote the rise of renewable fuels – wind power now has 18% of the energy market, compared to 6% in 2010 – at the cost of billions in price increases for consumers, emerge as the favorite?

DeAnn T. Walker | Public Utilities Commission of Texas

Will grid reliability become a major issue? What, if anything, can Texas lawmakers and regulators do?

The discussion, titled “Keep the Lights and Ventilators On: The Future of Texas’ Grid Reliability,” was moderated by Mike Nasi, a partner with Austin's Jackson Walker LLP law firm, who practices environmental and energy law. He has appeared before state and federal environmental and energy agencies and appellate courts for 24 years.

Nasi told Austin News that the group agreed that the direction the country takes on energy policy is worth watching closely. If the California system goes nation wide, it will be “particularly scary,” Nasi said.

Nasi said all four people who took part shared that view.

“The main takeaway from the California discussion for me was that all of the panelists agreed that the California situation is a cautionary tale for the rest of the country and that is concerning if national energy policies begin to be modeled after the California model, as opposed to the Texas model,” he said.

President Joe Biden has set a goal of eliminating carbon fuels from the national power system by 2035. That would mean no coal or natural gas, which currently play a crucial role in all American energy systems.

“You cannot run an electric system only on wind and solar,” said Public Utilities Commission of Texas Chairman DeAnn T. Walker, who participated in the 75-minute discussion.

Nasi has focused on energy and air quality issues and is counsel for energy interests in state, regional and national litigation and policy initiatives. He is an expert witness, invited speaker and lecturer at hearings, energy policy events and classrooms across the country, and is published in several trade, law and business journals on environmental and energy law. 

Nasi also serves on the National Rural Electric Cooperative Association’s Environmental Policy Council because of the significant work he has done for rural electric cooperatives.

Also participating were state Sen. Kelly Hancock, a Republican from North Richland Hills representing the 9th District; Phil Wilson, general manager of the Lower Colorado River Authority; and Walker.

Hancock said conservatives need to talk about environmental issues and point out that “practical, data-driven analyses” show their theories are successful.

“It is the free market in Texas that has led the charge nationally in these environmental issues,” he said. “The reality is, the California model does not work. Guess what model works? Ours does.”

Nasi said conservatives need to share that message. It flips the perception of people on energy issues, he said.

Walker’s term expires Sept. 1. Before being named to the post in September 2017, she served as senior policy director on regulated industries to Gov. Greg Abbott. She worked for the PUC from 1988-97, and also worked as associate general counsel and director of regulatory affairs at CenterPoint Energy. 

In her role as PUC chairman, Walker is the chair of the Texas Electric Grid Security Council, an ex-officio member of the Board of Directors of the Electric Reliability Council of Texas and the Texas Reliability Entity and a member of the Regional State Committee for the Southwest Power Pool. She is also a member of the National Association of Regulatory Utility Commissioners, serving on the Electricity Committee, and the Advisory Council of the New Mexico State University Center for Public Utilities.

Wilson joined LCRA in February 2014. Before that, he served as the Texas secretary of state under Gov. Rick Perry, as executive director of the Texas Department of Transportation, as a senior vice president of Public Affairs and as a corporate officer for Luminant, Texas’ largest electric generation company.

Nasi said Hancock, who has been closely involved in energy issues since he joined the Legislature in 2005, and Walker have each done an “amazing job” to ensure the energy needs of the Lone Star State are met.

“It’s great that Texas is growing,” Nasi said. “But with that comes challenges, like keeping the lights on, making sure we can meet that growing demand for electricity.”

That’s an issue California struggles with, Nasi said. He said while raging wildfires during the summer of 2020 garnered a lot of media attention, problems with blackouts and energy shortages did not.

Energy insiders have long said people won’t pay attention to the issue until they are literally left in the dark.

“Well, the lights went out in California and I’m not sure they started paying attention,” Nasi said.

He noted that California has imposed “very hostile” policies against traditional energy sources. When the state needs power, it imports it from states that have friendlier attitudes toward traditional fuels. During the blackouts, California bemoaned a shortage of transmission capabilities.

“It’s a very difficult, some may say unsustainable, system when out-of-state generators are asked to park on the sideline for the vast majority of the year and then bail California out,” he said.

Last summer, when other states dealt with high energy demands, they were unwilling to provide the power California asked for, leading to shortages, Walker said.

Wilson said one major cause of the California fires were sparks from transmission lines, some a century old. Sufficient fuel was at hand, in large part because the state would not allow free trimming or other “aggressive” maintenance programs, while focusing efforts and dollars on renewable energy.

“So they chose their poison,” he said.

Hancock said politics is driving California policy. That prevents proper long-term energy planning, he said, but California politicians told him in private meetings they cannot take positions they think are appropriate if they want to be re-elected.

Hancock said he sometimes finds himself under pressure to adopt policies that he doesn’t think will lead to the best outcome.

“Wait, let’s just wait and let the market work itself out,” he said. “It sounds sexy, it sounds good, but it’s not always practical.”

Nasi said one major problem is the “energy IQ” of the public. People have perceptions about wind and solar without grasping the importance of grid reliability. When the sun goes down and the wind doesn’t blow, where will power come from, he asked.

While California has pledged to add more transmission capabilities and use batteries to store more power, serious questions remain about the potential of batteries. Without enough power to meet demands, people will find their lives impacted and will demand answers, as well as energy.

Walker said the Electric Reliability Council of Texas, which operates the electric grid and manages the deregulated market for 75% of the state, provides transparency to customers through prices. That is not the case in California. She said she is in regular contact with ERCOT.

“I think they do a great job,” Walker said.

Nasi said Texas has welcomed power generators, unlike California. Wilson said he is “agnostic” on power sources and has no favorites. But he said the marketplace should be allowed to determine the best options.

An “inherent challenge” has been created by relying on wind and solar, and when they cannot provide energy, the demand cannot be met. As more companies come to Texas – many from California, Walker said – they are going to expect the power they need to operate.

Walker said if coal is taken out of the formula and natural gas is cut 25%, ERCOT will fail to provide the power that Texas needs.

Wilson said he is worried about the actions the Environmental Protection Agency may take under Biden. It could enact regulations that raise prices significantly, without worrying about the impact of its decisions.

“The economics don’t come into play at all,” he said.

The panel said some environmental actions may mean lights won’t come on in people’s homes. The example of California in the summer of 2020 can make that clear.

Nasi said based in recent history, courts may hold a dim view of policies that overreach. Some Biden administration decisions may be challenged and overturned in courtrooms, he said.

Nasi said the Texas Legislature doesn’t have to get involved at this point.

“I cannot speak for what the Legislature is likely to do, but the consensus on the panel appeared to be that there was no need for Texas legislative activity at this point and that the PUC has the tools it needs to continue to refine the Texas market, as needed, to prevent a repeat of the problems encountered in California,” he said.