By Cyrus Reed
Big Changes at the Public Utility Commission of Texas (PUCT)
It’s been an eventful month since the November election in Texas’ electricity world, with some unexpected news - mostly good - along with a few challenges. First, let them eat cake!

Public Utility Commission of Texas Says Goodbye to Two Commissioners
In true Texas tradition, the Public Utility Commission of Texas celebrated the departures of two commissioners, Jimmy Glotfelty and Lori Cobos, with cake after their final open meetings this month. We thank the two commissioners for their service, and wonder who will replace them.
That’s for Governor Abbott to decide - not us!
Is the Performance Credit Mechanism (PCM) Dead in Texas?
In other welcome news, the Performance Credit Mechanism (PCM) is… kind of dead.
Two years ago, the PUCT approved a “blueprint” for the PCM—a market scheme that would have charged all customers extra to pay generation companies (only fossil fuel-based ones) for being available during specific hours. The Sierra Club and others opposed this plan, citing high costs, incentives for aging, polluting plants, and a lack of clear reliability benefits.
Last legislative session, the Legislature put real guardrails on the PCM - limiting the potential cost to consumers to $1 billion annually - and this year, various entities looked in detail at whether the PCM still made sense. This week, the PUCT concluded that it wouldn’t provide any real benefit to the market or consumers. With a unanimous vote, the Commission agreed with Chairman Thomas Gleeson.
“After considering the ERCOT, E3 and IMM assessments and Commission Staffs summary of their work, I don't believe that the PCM, as currently designed, will provide the reliability benefits needed in the ERCOT market. While reconsideration of the PCM may be appropriate in the future, at this point I believe our collective resources are best directed toward implementing other market design initiatives, including but not limited to RTC+B and DRRS. We should also continue to explore other options for improving the reliability of the grid ahead of and during the upcoming 2026 reliability standard assessment.”
So, it’s not entirely dead - but it’s definitely on life support.
What is DRRS and Why Does It Matter for Texas?
Speaking of DRRS, or the Dispatchable Reliability Reserve Service, the Commission endorsed moving the new ancillary service into the development phase at ERCOT. Supported by the Sierra Club and many others, DRRS is initially being designed as an operational tool. The Commission did leave open the option – as again many large coal and gas generators have suggested - of also allowing it to be expanded for reliability purposes. Importantly, the Commission did not endorse the view that the service could only be provided by fossil fuel generation, leaving it to ERCOT and stakeholders to determine how new technologies like battery storage could provide the new service. The Sierra Club will continue to insist that the service should be open to all technologies.
Demand Response and Energy Efficiency in Texas: Progress and Delays
With all the growth in demand in Texas’s electric grid, the cheapest, cleanest and quickest way to meet our energy needs would be to reduce our demand through energy efficiency programs, along with “demand response,” literally shifting peak use.
In another positive sign, the Commission did approve a new rulemaking designed to help residential consumers in the competitive market have better access to demand response programs. The rulemaking was the result of legislation (SB 1699), supported by the Sierra Club, which passed last session. The new rule sets a goal for residential customers that are part of a demand response program - such as smart thermostats - to reduce peak demand by 20%. In reality, the new rule doesn’t require anything from customers, but it will require the retail electric providers to start tracking their programs and turning in detailed quarterly data to ERCOT. Hopefully, this will encourage more competition to provide such programs to residential customers. After all, if bitcoin operators can profit by turning down their energy use, everyday Texans should too!
However, other demand-side solutions remain stalled. . For more than two years,the Sierra Club has pushed for a rulemaking to expand energy efficiency programs, and for the Commission to meet its promise of beginning a new rulemaking to expand and make more efficient the “energy efficiency” programs run by the 8 large private utilities in the state.
That promise, made as part of the referenced blueprint - has now been pushed into 2025. In the meantime, we’ll support legislative efforts to achieve these goals.
South Texas to Receive $1.4 Billion for Solar and Storage Projects
The biggest news? The U.S. Department of Agriculture is providing up to $1.4 billion in loans and grants to the San Miguel Electric Cooperative (SMEC) to build 600 MW of solar and storage near its aging coal plant. Now that’s a stocking stuffer! While no retirement date for the coal plant has been set, the funding anticipates its eventual closure, and San Miguel officials have indicated they plan to transition away from coal toward clean energy in a matter of years.
For the thousands of South Texas residents and businesses that will benefit from this cleaner, cheaper energy resource, the federal funds are a welcome relief. SMEC provides power to the South Texas Electric Cooperative, which serves 9 separate distribution cooperatives powering 47 counties across rural South Texas. The project will reduce climate pollution by more than 1.8 million tons each year, equivalent to removing 446,000 cars from the road each year, and support as many as 600 jobs. While an initial announcement back in October had indicated that SMEC might get some money under the “Empowering Rural America” program, the speed and amount of money was a big surprise.
Apparently, the existing Biden administration wants to get money out the door before it might get clawed back by a future administration…
Federal Energy Efficiency Funds Could Help Texans Save Money
Meanwhile, Texas is awaiting approval for $690 million in energy efficiency rebates under the Inflation Reduction Act. The State Energy Conservation Office (SECO) applied for these funds last month, but the Department of Energy has yet to give the green light. hey applied about a month ago, but we are still waiting for final approval. Come on administration, Texas could use that money to help reduce our electric demand, clean the air, and save Texans their hard-earned money!