Power and Renewables

Winds of change in Texas power: Unraveling the implications of Senate Bill 6 for ERCOT’s energy future

byScott Bruns

The Texas Senate Business and Commerce Committee will be meeting Thursday, March 23, to discuss several energy bills related to the Texas power market. Senate Bill 6, which introduces the Texas Energy Insurance Program (TEIP), is one of the items to be discussed. This bill has the potential to fundamentally alter the structure of the Texas power market, and we believe it is essential for you to be informed of the details and potential consequences.

Key facets of Texas Energy Insurance Program

Texas Energy Insurance Program (TEIP), as outlined in Senate Bill 6, contains several noteworthy provisions likely to impact the power market. Some of the key facets include:

  • Requiring the installation of 10,000 megawatts of new thermal generation, to idle as a reliability backstop. While coal and natural gas units could equally apply, it would be likely that all of these would be natural gas units. This would lead to the siting of at least 10 or more new units with the most favorable new natural gas units being smaller quick-start units that have typically smaller output capacity.
  • An RFP process managed by the PUCT, is worded with specific requirements in which only the larger incumbent generation owners to likely to be eligible.
  • Ratepayers cover the full cost of build and guaranteeing a rate of return to owners, even if market forces make the generators obsolete.
  • Costs related to TEIP’s transmission and distribution utility services allocated to all retail customers in the ERCOT power region.
  • The establishment of the Texas Energy Insurance Fund, a special fund administered by the Public Utility Commission of Texas. The bill allows the commission to use money from the fund to provide payments to the independent organization certified for the ERCOT power region on behalf of customers to offset amounts owed to certified entities.

Potential impact of TEIP on power markets

The TEIP would cost more than $10 billion initially, which excludes the potential repercussions on the Texas power market. If enacted, TEIP would lead to the retirement of older units currently idling but available, for newer customer-funded assets that guarantee this rate-of-return. This scenario would likely benefit incumbent generators disproportionately and signal a re-regulation of the Texas market.

Other market changes under discussion

Senate Bill 6 is not the only proposal on the table. Senate Bill 2015 aims to mandate that 50% of all Texas electric generation must come from “dispatchable” generators, which could further influence the market landscape.

The Texas energy market’s future

While these bills seem to go against the competitive spirit of the Texas energy market, they reflect a growing desire among legislative members, the PUCT and recent ERCOT board appointees, to revert to a more concentrated market. Although the chances of these proposals becoming law are uncertain, we believe it is crucial for ERCOT market participants to be aware of these developments and their potential implications on the market structure.

Read our recent article by Rob Allerman, Sr. director of power analytics at Enverus, on the unprecedented growth in the ISO.

Picture of Scott Bruns

Scott Bruns

Scott D Bruns is the Director of Power Markets at Enverus, leading the research division who specialize in analyzing large datasets for informed decision-making. As an expert in the ERCOT market, he provides comprehensive reports on market trends for various stakeholders. Leveraging his background in power trading and asset management, Scott contributes to the development of innovative SaaS products and offers expertise on US power market fundamentals. As an Enverus spokesperson, he guides clients in asset siting, trading optimization, and investment decisions. Prior to joining Enverus, Scott traded power and provided in fundamental analysis at Direct Energy. He holds a bachelor’s degree in mathematics from the University of Houston. When not obsessed with power markets, Scott spends time with his family who provide the inspiration for all his efforts.

Subscribe to the Enverus Blog

A weekly update on the latest “no-fluff” insight and analysis of the energy industry.

Related Content

Energy Transition
ByCarson Kearl

This past week two companies in the advanced reactor space went public. Oklo Inc. (NYSE: OKLO) and Nano Nuclear (NASDAQ: NNE) had mixed opening days, with OKLO seeing nearly a 50% price drop from open and NNE trading up well...

Enverus Press Release - Tapping Alberta’s overlooked lithium brines
Energy Transition Intelligence
ByMatthew Keillor, Editor, Enverus Intelligence

Equinor is acquiring 45% stakes in two of Standard Lithium’s direct lithium extraction (DLE) projects in the Smackover Formation in Southwest Arkansas and East Texas, less than a month after closing the book on its U.S. onshore shale operatorship.

Enverus Press Release: Beyond the horizon: US solar and storage solutions are on the rise
Power and Renewables
ByMarie Amice

Learn how Enverus Contiguous Acreage enhancement simplifies parcel discovery, making negotiations easier and projects more viable.

Power and Renewables
ByColton Wright

Harnessing Sunlight and Soil As the early morning light filters through the countryside, you find yourself on a quiet rural road. You’re sipping coffee and humming your favorite tune. You’re on your way to see loved ones, explore a national...

Power and Renewables
ByBryan DiRenzo

In the United States, the anticipated load growth and the retirement of aging plants to meet state mandates are creating a compelling narrative for the expansion of battery storage infrastructure.

Enverus Press Release - Load impact imminent: Data center growth at the mercy of power supply constraints
Energy Transition
ByJeffery Jen

On March 25, 2024, the EPA released its final rulemaking on the update to 40 CFR Part 60 implementing its New Source Performance Standards for New, Modified and Reconstructed Fossil Fuel-Fired Electricity Generating Units.

Energy Transition Intelligence
ByMatthew Keillor, Editor, Enverus Intelligence

In March 2021, the Biden administration set a goal of deploying 30 GW of offshore wind capacity in the U.S. by 2030. These efforts have faced significant growing pains.

Enverus News Release - Defying peak oil predictions
Trading and Risk

Crude and product stocks are currently at levels that suggest Brent should be ~$85/bbl.

Energy Transition Power and Renewables
ByPrashant Kumar

The pace of electric vehicle (EV) sales growth has slowed down based on the most recent North American EV sales data.

Let’s get started!

We’ll follow up right away to show you a quick product tour.

Let’s get started!

We’ll follow up right away to show you a quick product tour.

Sign up for our Blog

Register Today

Sign Up

Power Your Insights

Connect with an Expert

Access Product Tour

Speak to an Expert