A statement-of-intent analysis from the author indicates the bill in question is intended to keep cities from transferring money from municipal electrical utilities if it would cause budget problems and possible rate increases for the utilities — the Texas Energy Report is tracking this bill closely
 

March 24, 2023 — A Texas Senate bill that’s setting off alarms in San Antonio, Austin and elsewhere has not yet moved out of the Business & Commerce committee.

Both the San Antonio Express-News and the San Antonio Report have written about official reaction to Sen. Charles Schwertner‘s SB 1110 (filed in late February) which they say has the potential to prevent 72 cities in the state from transferring budget money from their municipal-owned or operated electric utilities to their general budgets.

Sen. Schwertner is chairman of the committee, and he’s countered complaints by saying the bill is “not a ban on transfers,” but a ban on what he calls “excessive” transfers.

The senator has stated that such transfers would be prohibited “if the transfer would result in a rate increase or financial deficit for the municipal utility (bill analysis) and transfers “in the municipal utility’s cost of service study.”

In the bill analysis by the senator, it was stated that “Many municipally owned utilities (MOU) direct a portion of electricity revenue annually to a general fund for use by the city,” but “Little is known about how general fund transfer revenues are used by cities once they are redirected from an MOU to a city government.

“The percentage directed to be transferred is often included in an MOU’s cost of service study that determines customer rates, even if the transfer results in the MOU raising rates.

“There have been instances where a city required a large transfer of revenue from the MOU to their general fund, putting the utility in debt, which caused the utility to raise customer rates.

“Had the city not required such a large transfer, there would be no need to raise customer rates to fill the budget deficit.

S.B. 1110, the analysis says, is intended to prevent a city from “transferring revenue to their general fund from an MOU if the transfer would result in a deficit for the utility or a rate increase for customers.

“S.B. 1110 also prevents MOUs from including these general fund transfers as part of the MOU’s cost of service study.

CPS Energy and representatives from the cities of Austin and San Antonio have joined others — including the Texas Public Power Association — in testifying this past Tuesday before the committee against the bill, with one San Antonio official (the city’s chief financial officer) saying the bill would result in “catastrophic loss of revenue” that would have a big impact on city services….
 

By Alex Mills

The oil industry in Texas, and throughout the United States, witnessed a decline in price recently as high inflation, rising interest rates, and troubles in the banking system have created fears of the economy entering a recession and further damaging demand.

Crude oil prices are down 40% from a year ago ($120 per barrel compared to $69 on Wednesday). Gasoline and diesel prices followed the decline in oil with the U.S. retail gasoline averaging $3.422 on March 20 down from$4.239 a year ago and diesel averaging $4.185 compared to $5.134 last year.

Federal Reserve Chairman Jerome Powell announced Wednesday the Federal Reserve Bank is increasing interest rates another 0.25% taking it from 4.75% to 5.00%.

He said inflation remains elevated and the Fed expects inflation to be 3.5% by the end of the year.

Chairman Powell also said the U.S. economy is slowing down, and he expects real GDP (gross domestic product) to grow slightly at a rate of 0.4%….
 

In 2021, 26% of eligible U.S. customers participated in their state’s retail choice program, or 13.2 million U.S. residential electric customers, based on data from our Annual Electric Power Industry Report. The participation rate in U.S. residential retail choice programs remained relatively unchanged from 2019 to 2021, following several years of modest growth.

In states with retail electricity choice programs, customers can choose to purchase their electricity directly from a retail energy supplier rather than from their local utility. Their local utility then delivers the purchased electricity to their home through the traditional power grid system. Retail choice programs differ from traditional utility services, where the utility both procures electricity for the customer (either by generating the electricity itself or by purchasing it from a supplier) and delivers it to the customer’s home….
 

March 15, 2023 — A Texas House bill filed by Rep. Trent Ashby would give voters the decision on whether to okay a Constitutional amendment to improve internet access in certain unserved and underserved areas at a cost of about $5 billion.

HB 9 would create the Texas Broadband Infrastructure Fund using $5 billion from the Texas Economic Stability Fund (the “Rainy Day” fund) to allow the state comptroller and the PUC power to direct the funding to targeted areas.

House Speaker Dade Phelan has designated the bill as a priority in the current session; it’s now in the House State Affairs committee….
 

March 15, 2023 — Proposed laws to go to voters for funding the upkeep of roads servicing O&G-related areas of Texas are back, with Midland Rep. Tom Craddick and Odessa Rep. Brooks Landgraf filing bills to bring state tax money back to communities through the creation of a fund and the mechanisms needed to administer it, along with an alternative plan.

House Joint Resolution (HJR) 27 would create the GROW (“Generate Recurring Oil Wealth”) fund, to be paid by legislative appropriations, severance taxes, grants and gifts.

The resolution, “providing for the creation of and use of money in the Grow Texas fund and allocating certain general revenues to that fund, the economic stabilization fund, and the state highway fund,” is now in the House Appropriations committee….
 

March 14, 2023 — Texas should have exclusive jurisdiction to regulate greenhouse gas emissions in the state, according to state Sen. Brian Birdwell‘s SB 784, which is now in the Senate Natural Resources and Economic Development committee.

If passed, the bill would pre-emt regulation by local authorities of greenhouse gases and would be under jurisdiction of the Texas Commission on Environmental Quality (TCEQ).…
 

March 14, 2023 — Two companion bills aimed at prohibiting the banning of engine sales based on the type of fuel such engines use are now in committees, with one of them taking public comment.

Odessa State Rep. Brooks Landgraf‘s HB 2374 is now in the House State Affairs committee while Ft. Worth Sen. Brian Birdwell’s SB 1017 is set for committee public hearings through Senate Business & Commerce.….
 

March 14, 2023 — As is the custom through the first half of the Legislative session, constituents from all over the state have been shaking hands with politicians at the Capitol — including Tuesday’s meetup with native Houstonian and actor Dennis Quaid, pictured here with District 17 Sen. Joan Huffman.

We bring this up because Mr. Quaid was talking with at least two legislators about his interest in upgrading the ERCOT grid……..
 

By Michael D. Plante and Jessica Rindels A new type of refinery—a lithium refinery—is coming to Texas. Tesla, the largest manufacturer of electric vehicles (EVs) in the United States, is developing the facility …

March 9, 2023 — Low-interest loans, public emergency backup generators, cyberattack grid hardening and cancellation of state subsidies for wind and solar are among the priorities in a new multi-billion-dollar plan made up of several Senate bills unveiled in the state Legislature on Thursday aimed at helping improve Texas electric grid reliability.

State Sen. Charles Schwertner said at a Capitol news conference of state senators that so far renewables are distorting the power supply markets; he called for “more dispatchable generation to balance out and assure we have a grid that’s performing in times of need.”

Lt. Gov. Dan Patrick said there’s a strong need for both renewables and more fossil fuel energy generation to keep the grid on an even keel, which he hoped will “balance fairness and the equity” among power sources.

He said the bills are the result of hours of testimony and months of study of the Texas electric grid.

“We’re going to build these plants and we’re going to have renewables that help keep our air clean and prices low.”

Sen. Phil King is also leading the charge that included the introduction of the new Senate bills.

Perhaps the most controversial of the bills introduced is SB 6, which includes the creation of the Texas Energy Insurance Program (which would exist outside the control of any municipality and would exclude such municipalities and co-ops for a period depending on whether “customer choice” is implemented) and “other funding mechanisms” (see below) that would support building and operating new generation facilities, referred to as “reliability assets,” strictly within the ERCOT region under a state-certified ownership.

Sen. Schwertner said the new program will add 10,000 MW of power to the grid.

“This is not building a capacity market, it’s an insurance product,” he said, emphasizing the need for a backup plan in times of extreme need.

The costs of the Energy Insurance Program transmission and distribution would be borne by “all retail customers in the ERCOT power region” and participating entities would be guaranteed by the PUC to receive a “reasonable rate that recognizes the critical service the reserve” would provide, with the PUC deciding on that rate.

To be part of the new Energy Insurance Program, entities must first establish financial stability by demonstrating total assets of at least $10 billion for every gigawatt of generated capacity plus acceptable cash reserves and credit rating — plus the demonstration of energy expertise by already operating assets producing at least 15,000 MW, maintaining OCEA and standardized ratings — and entities must establish best practices for customer service and project quality standards as defined in the the bill.

SB 6 says the PUC may require an electric utility to provide, at wholesale prices, transmission service to another utility, to the Energy Insurance Program or to other entities involved….
 

By Alex Mills

Electric vehicles – better known as just EVs – have become the talk of the town in communities across the U.S. and Europe.

Encouraged by subsidies funded by federal tax dollars, the EV side of the automotive industry has experienced significant growth. The number of registrations of newly sold electric vehicles globally has increased from 3 million five years ago (2017) to 15 million in 2022.

Tesla leads EV sales in the U.S. with 64.6% market share last year. Ford had 7.5% of the U.S. market and GM had 4.8%.

Tesla’s stock price has been volatile, peaking at $407 per share on Nov. 3, 2021 and dropping to $108 on Jan. 3, 2023 but recovering to $182 on Wednesday. Tesla decreased the price of its vehicle earlier in March, but they remain higher than gasoline-powered vehicles. Tesla’s Model 3’s list price is $42,990 compared to the Model Y at $54,990, and the Model S sells for $89,900, according to its web page on Wednesday….
 

March 7, 2023 — The Public Utility Commission of Texas secured refunds and bill credits of $100,581 for Texas electric, water and telecommunications customers in the second quarter of FY 2023 (December 2022-February …

March 1, 2023  – At their Feb. 28 open meeting, RRC Commissioners unanimously voted to refer two actions by the Environment Protection Agency (EPA) to the Texas Attorney General to challenge their validity.

In 2018 the Texas Commission on Environmental Quality submitted the state’s robust Interstate Transport State Implementation Plan (SIP) for National Ambient Air Quality Standards for ozone – a plan to ensure that emissions within the state would comply with the “good neighbor” provisions of the Clean Air Act and not affect air quality in other states. The EPA disapproved the plan in February 2023, but not before proposing a federal implementation plan (FIP) plan almost a full year prior to disapproving the state plan.

The RRC is concerned that the EPA was ready to ignore the state’s expertise on regional factors, and circumvented procedures in the Clean Air Action by proposing a federal plan before its final disapproval of the SIP.

Not only that, but the proposed FIP also introduces restrictive emissions standards for stationary engines that are used in the pipeline transportation of natural gas. As the state’s oil and gas regulator, the RRC is concerned about how the proposal could hinder a vital industry that contributes significantly to the Texas economy and the state budget.

“When the federal government oversteps in the business of Texas, it is our responsibility to push back,” said RRC Chairman Christi Craddick. “This federal administration has yet again proven that they do not value the profoundly beneficial impact of the oil and gas industry in Texas, and this vote is the first step for the Railroad Commission of Texas in fighting back against unreasonable and unjust attempts to harm this state.”…
 

March 1, 2023 — Texas tax income from oil and gas, which reached record levels last year when compared to low 2021 levels, settled down last month, according to figures released from the comptroller’s office.

The oil production tax income rose only 2% when compared to February 2022, bringing in $492 million.

Natural gas production tax income actually dropped 5% last month Y/Y to $305 million.

And motor fuel taxes collected were up only 1% at $304 million.

Motor vehicle sales and rental taxes brought in $542 million, up 14% over February 2022…..
 

February 27, 2023 — The Railroad Commission of Texas has filed comments on draft guidance issued by the U.S. Department of the Interior (DOI) for utilizing formula grants to plug orphaned oil and gas wells.

Several aspects of the draft guidance have caused concern for the RRC because it could hinder the state’s efforts to use as much funding as possible for important work that protects residents and the environment.

Among the concerns is the fact that the DOI may end up changing formula funding calculations for states, which could mean Texas could get less than the approximately $318 million that was originally due to the state.

The guidance also has program requirements for states that go beyond the scope of the federal legislation that authorized the well plugging funds. These requirements are burdensome and sometimes unrealistic to implement, which will inevitably hamper the momentum of the state’s plugging efforts resulting in less wells being plugged than could be.

The comments submitted by the RRC are guided by the agency’s expertise in plugging orphaned oil and gas wells. That expertise was key to Texas’ first in the nation status utilizing federal funds to plug orphaned wells, when work began in October 2022 with the state’s $25 million initial grant.

Adding unnecessary requirements to the next phase of federal funding, the formula grants, can hinder the state’s ability to plug as many orphaned oil and gas wells as possible.

“As Chairman of the Railroad Commission, I believe it is crucial for this agency to thoroughly assess all strings attached to federal money. When dealing with the federal government, we always read the fine print,” said RRC Chairman Christi Craddick….
 

By Alex Mills

The oil and natural gas industry in Texas posted gains in employment, industry activity and production during 2022.

The Texas Petro Index (TPI), a fully inflation-adjusted tool for tracking growth rates and cycles in the Texas upstream oil and gas economy, increased 22.4% last year to 178.4 from 145.8 in 2021, according to petroleum economist Karr Ingham, who created and maintains the index.

“The expansion was spread across most indicators of upstream activity in Texas,” Ingham said.

He said the rise in oil prices, increases in the rig count and drilling permits, growing production for crude oil and natural gas, and growth in direct upstream oil and gas employment in Texas were major contributors to the increase in the TPI.

“Real (inflation-adjusted) crude oil prices were up by over 31% on average in 2022 compared to 2021, though the real December monthly average was up by only 1.2% year-over-year,” Ingham said. Oil averaged $92.14 in 2022 compared to $70.29 in 2021, according to TPI….
 

February 23, 2023 — Rate relief charges on Texas customers utility bills will secure a $3.5 billion ratepayer-backed bond deal from the pending Texas Natural Gas Securitization Finance transaction.

Fitch Ratings said on Thursday it expects to rate the ratepayer-backed bonds (Series 2023) ‘AAA(EXP)sf’, with a Rating Outlook of Stable.

Jefferies is the lead underwriter on the transaction, according to Fitch Ratings’ pre-sale report.

While Texas Natural Gas Securitization will issue the notes to the market, about nine other participating utility entities will act as collection agents to the trust.

Each participating utility will collect the fees from its respective customers and forward them to the trust, essentially fulfilling the role of servicer, Fitch suggests….
 

February 22, 203 — Todd Staples, President of the Texas Oil & Gas Association (TXOGA) issued the following statement in support of SB 1017 filed by Senator Brian Birdwell and HB 2374 filed by Representative Brooks Landgraf:

“Oil and natural gas are irreplaceable in making our modern lives not only possible, but undeniably better,” said Staples. “Misguided attempts to ban the use of particular types of engines or even specific fuel sources only serve to disrupt the lives of consumers and business owners who rely on affordable, reliable energy sources. TXOGA thanks Senator Birdwell and Representative Landgraf for filing this important legislation and we look forward to our continued work with the Legislature to protect energy choice.”

This legislation would protect energy choice by preventing political subdivisions from adopting or enforcing ordinances, orders, regulations, or similar measures which would limit access to specific fuel sources or prohibit the sale of engines based on their fuel source….
 

Baker Hughes and Nabors Industries join with universities, IEA, foundations and Project Innerspace examining geothermal energy market potentials
 

February 22, 2023 –A coalition of Texas universities and others spent five years studying details of potential resources, technology, legal problems, environmental and regulatory impacts related to geothermal energy production, and are promoting their recent report, “The Future of Geothermal in Texas: The Coming Century of Growth & Prosperity in the Lone Star State.”

Called a “multi-year, multi-disciplinary, cross-collaborative effort” by researchers at five Texas universities, the University Lands Office and the International Energy Agency resulted in “a landmark study.”

The fifteen-chapter study includes analyses of the location and quality of Texas geothermal resources, evaluations of technology developments, the role of the oil and gas industry in achieving growth and scale, as well as environmental, regulatory, economic, and legal issues pertinent to the growth of the geothermal industry, both in Texas and globally.

The study evaluates the size and potential scale of geothermal — the naturally occurring heat energy in the Earth’s subsurface — as an abundant clean energy resource in the state of Texas, as well as its potential to scale globally over the coming decades. Most importantly, it provides a scientific basis for informed decision-making as entities begin to consider the increased development of geothermal in Texas….
 

Build a geothermal energy well for your home, but then who owns it, you as property owner or whoever owns mineral rights, and who’s your regulator, the RRC or the TCEQ?
 

February 22, 2023 — Two bills filed in the Texas Senate and two companion bills filed in the House attempt to clear up questions on the up-and-coming technology related to home geothermal energy.

SB 785 and SB 786 address the questions of who actually owns a geothermal well and which state agency will handle regulation of such wells.

Geothermal energy is touted by some as the most economical and environmentally-friendly form of renewable energy, produced by harnessing heat from the ground using heat pumps and fluids (or gases) to move subsurface energy using pipes or vertical boreholes reaching several hundred feet into the ground, with energy then transferred to the electric grid (utility-scale) or rendered as heat (for homes).

There are also other methods and technologies that are beginning to gain ground in geothermal research……