Texas Electricity PCM

What You Need to Know About The Texas PUC Performance Credit Mechanism (PCM) Proposal

There is another big change coming to the Texas electricity grid.  The Texas Public Utility Commission is considering a first-of-its-kind proposal called the Performance Credit Mechanism (PCM) to enhance the state’s electricity grid’s reliability during extreme weather events.

Key Takeaways

  • The Performance Credit Mechanism (PCM) proposal aims to improve Texas’ power grid reliability during extreme weather events.
  • Under the PCM, power generators commit to producing more energy during high demand periods, selling credits to electricity retailers for additional income.
  • Critics of the PCM argue that it is untested and could lead to increased consumer bills, while supporters believe it will encourage investment in new power generation facilities.
  • Texas electricity consumers should stay informed and engaged in the decision-making process to ensure their interests are considered as the state moves forward with grid reliability proposals.

If you’re a Texas resident, you’ve likely experienced firsthand the impact of the state’s electricity market during the devastating winter storm in 2021. Millions of people were left without power, and the state is now seeking ways to improve the reliability of the power grid. One proposed solution, known as the Performance Credit Mechanism (PCM), has been making headlines. Here’s what you need to know about this first-of-its-kind proposal and how it could impact you as a Texas electricity consumer.

The Performance Credit Mechanism (PCM) Proposal

The PCM is intended to ensure a reliable power supply during extreme weather conditions when electricity demand surges and production drops for various reasons, such as a lack of sun or wind for renewable energy or equipment breakdowns at gas- or coal-fired power plants.

Under the PCM, power generators like NRG Energy would commit to being available to produce more energy during these high demand periods. These companies would then sell credits to electricity retailers like Gexa Energy, municipal utilities, and co-ops that sell power to homes and businesses. The idea is that these credits provide an additional income stream for power generators, making it more financially appealing to build new power plants and ensuring a more reliable energy supply during extreme weather events.

Pros and Cons of the PCM Proposal

Benefits of the PCM include smoothing out volatile price spikes during high demand and encouraging investment in new power generation facilities. The proposal has support from power generating companies, Governor Greg Abbott, and Public Utility Commission (PUC) Chair Peter Lake.

However, there are concerns about the PCM. Critics argue that the proposal is risky, untested, and not properly analyzed. There’s also disagreement over whether the PCM will actually improve grid reliability. Another significant concern is the potential increase in consumer bills. While experts disagree on how much bills could rise, industrial facilities and manufacturers, represented by groups like the Texas Association of Manufacturers, may be most affected.

PUCT Adoption and Next Steps

The PUC, responsible for overseeing the Texas electricity market, voted unanimously to adopt the PCM. However, the commission has deferred implementation until Texas lawmakers have the chance to review the proposal and provide guidance or direction based on its merits.

In the meantime, the PUC has directed the Electric Reliability Council of Texas (ERCOT) to develop bridging options to retain existing power plants and build new generation resources until the PCM can be fully implemented. The PUC is also working on evaluating and establishing an appropriate reliability standard for ERCOT.

What This Means for Texas Electricity Consumers

As a Texas electricity consumer, you might wonder how these changes will affect your daily life. First, it’s important to keep an eye on your electricity rates, as experts disagree on the extent to which they could increase under the PCM. Industrial facilities and manufacturers may face larger bills, but it’s still unclear how this will impact residential consumers.

On the bright side, if the PCM is successful, it could lead to improved grid reliability and better preparedness for extreme weather events. This means fewer power outages and a more stable electricity supply for you and your neighbors.

To stay informed and have a say in the decision-making process, it’s crucial to engage in public discussions and follow updates from the PUC and Texas lawmakers. This will allow you to voice your concerns and ensure that your interests are considered as the state moves forward with this ambitious proposal.


The changes to the Texas electricity market aim to address the challenges faced during the 2021 winter storm and improve the reliability of the power grid. While the PCM has its share of supporters and critics, its potential impact on consumer bills and grid reliability remains uncertain. As a Texas electricity consumer, staying informed and engaged in the process will help

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