EFH companies at odds over $5.2 billion battery proposal
Power line company Oncor is facing opposition to a $5.2 billion proposal to install batteries across the state’s power grid from an unlikely source – its own parent company Energy Future Holdings.
Sibling companies Luminant and TXU Energy, which unlike Oncor are run by EFH’s board of directors, issued a statement Tuesday arguing against adjusting the power market to allow transmission companies like Oncor to own batteries.
“Luminant and TXU Energy support the development of battery technology in [Texas], but subsidizing batteries via the utility rate base would shift risk to ratepayers and undermine the competitive market,” the statement read.
Oncor’s proposal, which calls for installing 5,000 megawatts of battery capacity across Texas at a cost of $5.2 billion, stands to upend the state’s power generation business. Power could be generated at night and stored, to be released the next day when demand is highest, cutting out the need for additional plants.
A study by the Brattle Group, which consults for the state’s power regulator, predicts electricity prices would actually decrease for consumers. But at the same time transmission companies would file for increased rates, shifting more of the energy industry under government regulation 15 years after legislators voted to deregulate the electricity market.
Reached for comment, Oncor said concerns over the impact on the state’s power market had shown to be unfounded by the Brattle report.
The statement by Luminant and TXU Energy Tuesday represented the first public criticism by power companies of the proposal, which would require a change in state law to move forward. Behind the scenes, some generators have lobbied for weeks in opposition. But publicly, the industry has largely taken a wait and see approach.
“I think the initial reaction is there’s a bright line between the transmission companies and the generators,” John Fainter, president of the Association of Electric Companies of Texas, said in an interview earlier this month. “There will be a lot of discussion on it as to how its put together. In the end it’s one of those, the devil is in the details as to how it works.”
That companies sharing a corporate parent are at odds is an unusual scenario in the business world.
The discord stems from the $45 billion leveraged buyout of the former TXU Corp. in 2007. In order to protect the corporation’s power line network from the massive debts being taken on by EFH, state regulators insisted Oncor be put behind a “legal ring fence” with its own independent board of directors.