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Texans push market-driven energy policies on Capitol Hill

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Texans push market-driven energy policies on Capitol Hill

A group of Texans was in Washington, D.C., recently touting the Lone Star state's market-driven energy policies at a time when the Trump administration is taking what critics say is a heavy-handed approach intended to benefit favored industries.

The Federal Energy Regulatory Commission in January rejected a proposal by the U.S. Department of Energy to provide financial support to help keep struggling nuclear and coal-fired power plants operating. After that failed effort, a top assistant to Energy Secretary Rick Perry assured the West Virginia coal industry that the department was still trying to aid the sector.

Texas, by contrast, has let "economic Darwinism" shape the state's electricity market, allowing new low-cost generators to replace aging and less-efficient resources, Georgetown, Texas, Mayor Dale Ross said March 8 at an event on Capitol Hill that was hosted by free-market think tank R Street Institute, the Texas Clean Energy Coalition and The American Conservative.

"We wanted to bring this discussion to D.C. because obviously there are ... a lot of ideas percolating about energy markets and the electric grid and what the role of government ... ought to be," Texas Clean Energy Coalition Executive Director Elizabeth Lippincott said. "[By] creating open markets and allowing them to work even when it's not necessarily maybe the easiest or doesn't feel like the safest thing ... can unleash tremendous economic activity and tends to drive ... the electric market toward cheaper, more efficient and cleaner technologies that benefit everybody."

Cheryl Mele, senior vice president and COO of the Electric Reliability Council of Texas said the state's approach has not proven risky or problematic.

ERCOT, the operator much of Texas' electric grid, is heading into summer with a narrower reserve margin after a number of large fossil-fueled power plants retired. That should cause power prices to rise, which will send the signal that "the time is coming very soon to build some more generation, maybe some more combined-cycle natural gas that can be complementary with the renewable resources," Lippincott said.

'Running away' from renewables

Ross, whose city north of Austin, Texas, has signed contracts for enough renewable energy to cover its electricity needs, criticized Perry for "running away" from his track record as a governor of a state that experienced explosive growth in wind farm development, thanks in large part to a decision by Texas lawmakers to fund a $7 billion transmission project.

Without Perry, Texas "probably wouldn't have the grid and we wouldn't have renewable energy," Ross said. "And he's running away from it like that's a bad thing. ... But maybe that's because he reports to a guy who's not really a renewable energy fan."

"If you win the economic argument, by default you're going to win the environmental argument," Ross added. "Our decision is based on facts, and those facts led us to renewable energy."

At a clean-energy conference in April 2017, Perry said the Trump administration would "ensure that renewable energy finds its way to the grid," adding, "we will also ensure that our grid is reliable, our baseload capacity that is needed to power the economy is not tossed aside in the name of political favoritism."

"Now I recognize that markets have a role in the evolution of our energy mix, but no reasonable person can deny that the thumb, and in some cases the whole hand, has been put on the scale to favor certain political outcomes," Perry added.

An official at the Energy Department recently said the government wants to help companies develop smaller, high-efficiency coal-fired power plants. Some energy experts think the plan is infeasible, in part because smaller plants would not benefit from economies of scale. However, the proposal lines up with the priorities of some in the coal sector.

"Politics instead of fact-based decision making is not a good thing," Ross said.