TXOGA Statement on Public Utility Commission’s Vote Recommending the Creation of a Performance Credit Mechanism

AUSTIN – The following statement can be attributed to Todd Staples, President of the Texas Oil & Gas Association (TXOGA):

“We listened intently to the PUC’s deliberation on electricity market redesign and recognize today’s work is the start of the process. We acknowledge the Commissioners’ comments to maintain competition and innovation in the solutions, but concerns remain regarding shifting risk away from generators and toward consumers as the Performance Credit Mechanism (PCM) model is crafted and continues to evolve. Many details are yet to be resolved and questions remain regarding the PCM’s ability to maintain a market driven system that provides both reliability and affordability to consumers.

“The PCM modeled by E3 reflected a cost of $5.7 billion annually and focused on availability rather than performance. The conversation today discussed pay for actual performance which is encouraging but not sufficiently defined and has yet to be modeled to understand the full cost to consumers. In addition to the PUC considerations that must still be fully vetted, there is a role for the Legislature to ensure oversight focused on consumer protections and to provide policies which will spur new dispatchable generation.

“Specifically, we support a three-pronged legislative approach that will:

  • create a state loan guarantee or low interest loan fund targeted to encourage actual investment in new dispatchable electric generation, similar to the legislatively created SWIFT fund for water needs;
  • incentivize new dispatchable electric generation by making projects eligible for temporary property tax abatements that will lower costs of development and pass savings on to consumers; and
  • develop a new reliability service that directly rewards new, flexible, reliable and dispatchable electric generation for being available to address unexpected variations in demand and generation availability every day.

“Market incentives for new dispatchable generation performance are key to providing both reliability and affordability to consumers. As some of the state’s biggest consumers of electricity, we look forward to working to ensure the final outcome is good for Texas. Any plan adopted must ensure reliability services insist that generators are paid for real time performance–this will increase market revenues available to support new investment while addressing the actual reliability in ERCOT.”


Founded in 1919, TXOGA is the oldest and largest oil and gas trade association in Texas representing every facet of the industry.

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