(The Center Square) – Of the roughly 4,000 bills filed in the Texas legislature so far, about 120 affect the Texas oil and natural gas industry, according to an analysis by the Texas Independent Producers and Royalty Owners Association (TIPRO).
On Tuesday, several lawmakers discussed legislative priorities at a TIPRO annual meeting in Austin.
State Rep. Drew Darby, R-San Angelo, who chairs the House Energy Resources Committee, said the committee would “to try to make sure we focus on the important issues facing the state and make sure that this industry is equipped with legislative authority and statutory authority to do what you need to do [to meet] the energy needs of this state.”
State Sen. Bryan Hughes, R-Mineola, said the legislature would be expanding Environmental Social Governance (ESG) prohibitions, strengthening the Texas grid, and address ways to counter federal subsidies for intermittent energy that have distorted the energy market. These are all legislative priorities of Gov. Greg Abbott and Lt. Gov. Dan Patrick.
“ESG has cut off funds for developing natural gas power plants,” Hughes said. “So, Texas is pushing back on that. Then a big investment last session, we’ll be doing more of that,” he said, referring to the $5 billion Texas Energy Fund Loan Program. “We’re going to try to keep an environment where there’s low cost, reliable, plentiful energy, which means those good jobs and good for Texas family.”
State Sen. Kevin Sparks, R-Midland, filed a bill to prohibit federal rules related to ESG from being considered in Texas. “If anything is related to ESG in [the federal] determination [it] can [be] ignore[d] here in the state of Texas. We don’t want those external factors that have nothing to do with what they’re trying to regulate to have any impact on what we do here in Texas.”
He also filed SB 396 requiring an update to the Permian Basin reliability plan every five years. Darby said he “will wholly support that idea,” adding that “transmission is going to be at the center of my legislative effort this session.”
Sparks also said Texas is “still struggling with attracting dispatchable power.” Despite the legislature passing the $5 billion energy fund loan program, which voters approved, the money goes toward gas fired power generation. But what “we desperately need all across the state is base load generation, and I’m not sure we’ve figured out the right steps yet to create that market,” Sparks said. This session, he said he hopes to “tweak the language so that it encourages what we really need on base load.”
Hughes said reforms are needed to address the unlevel playing field created by federal subsidies for intermittent energy sources like wind and solar. The Texas’ grid is maintained by ERCOT, which sells power through a reverse auction, Hughes explained. “Whoever bids lowest, they’re the ones that get to sell into the grid. The idea was it would bring prices down.
“What we did not plan for,” he said, referring to the legislature, “were these massive federal subsidies of wind and solar. That means when the ERCOT trading floor is operating and you’ve got a natural gas plant you’re bidding in at this price, your nuclear plant then bids in here, you’re even cheaper. But then wind and solar, they can bid in to sell energy at a loss. They get subsidized by our federal tax dollars. It’s hard to compete with bidding in at a loss.”
The federal government created “a distorted, Frankenstein market,” he said, that makes it impossible to invest in building fossil fuel plants. “Sadly, the market has responded to what the feds have been doing” and the legislature is trying “to fix that without further distorting the market.”
“Because the federal subsidies are incentivizing wind and solar and because ESG is cutting off capital to natural gas plants, that’s why we felt like we had to do something,” he said, referring to expanding the Texas Energy Fund. Patrick has already set a goal to double it.
Hughes agreed with Sparks and Darby about addressing an energy generation and transmission problem statewide. “We don’t have the transmission infrastructure to move the power we need with all these people coming here,” he said, adding that 2027 “is when we could be in real trouble where the demand outstrips the supply. By God’s grace we may just make it, but it’s a real problem. We waited too long to address these federal subsidies on wind and solar, so it is still a huge issue.”
The lawmakers also discussed the need to ensure that infrastructure investment, road repair and maintenance, and other community needs are prioritized in the oil and natural gas producing areas of the state. Despite the Texas oil and natural gas industry paying $27 billion in taxes last year, that money doesn’t stay in the region where revenue is produced.
Darby said ensuring funding is directed to the region that produced it has been challenging because there are only 17 state representatives who represent two thirds of the landmass of Texas. By comparison, 25 represent Harris County alone.
Lawmakers, “They like our revenue. … Our challenge is to convince them of the need … to [help] areas of the state that have been diminished because of oil and gas production. The challenge is once representatives and senators get hooked on that revenue, it’s hard to redirect that revenue to some other place.”
