Senate Nominations met on April 12to consider for multiple nominees. This report focuses on the PUC nominee, James William McAdams. A video of the hearing can be found here.
This report is intended to give you an overview and highlight of the discussions on the various topics the committee took up. It is not a verbatim transcript of the hearing but is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.
Opening Statement
James William McAdams, Public Utility Commission of Texas
- Wish he were there under different circumstances, feels his nomination was made possible by polar vortex in Feb
- Restoring the public’s trust in PUC in ability to regulate essential services needs to be number 1 priority
- Some have questioned if PUC has authority to regulate energy markets and if so, how
- Worked in the area for some years, believes PUC is the ultimate regulator
- State has public interest in regulating essential services; role of legislator to establish policy
- PUC should only formulate policy within the confines of the legislature’s clear intent, view should also apply to regulation of telecommunication and water services
- Responsibility to act in partnership with legislature, ERCOT, and PUC civil servants to develop system of safeguards
- TX system of government should be model to follow; policy governing complex industries should be adapted to provide best possible outcomes for Texas Consumers
- Been asked why he is doing this; it is important for the future of our state, his duty to do everything he can to meet the challenge and reaffirm core mission
- Buckingham – What in your opinion should be the near-term goals of the PUC?
- Considering giving valuable tools to the commission to enhance reliability moving forward
- Wind and solar should be incorporated, federal policy will continue to enhance these
- PUC can pair with dispatchable forms of energy to have a system of ancillary services
- Next would be to face financial impacts caused by February event by affording access to cheap government backed financing options; goes back to Rural Electrification Act
- PUC needs better visibility into daily operations of ERCOT, a fixed presence within the agency so we can provide real-time data to policy members
- Alvarado – When the PUC had the emergency order allowing market prices to remain at cap for several days, how would you react to that?
- My belief the PUC and commissioners had access to data I am not privy to, otherwise cannot see objective of holding at that level
- Cannot see myself making that decision with the facts that I have now; had 16,000 Megawatts of reserve on at that time, knew that nameplate fleet had 40% broken/off
- Do not want to disincentive people from coming in and supplying power when needed
- Alvarado – Mentioned PUC needs to have an entity inside ERCOT, could not agree with you more; do you have an idea of what that might look like?
- Worked as US army liaison to British army controlling all of southern Iraq; had a good relationship and I reported everything that they were doing
- Need someone embedded in daily operations so we know what is happening on the front end
- Springer – Want to make sure you are committed to working with us
- Believes wholeheartedly in the primacy of legislature in agency rules
- Legislative intent is important, and it is agency’s duty to provide the most accurate data
- Springer – You talk about dispatchable power and reliability; got to look and see affordable reliable power that made the Texas miracle
- Paxton – Major issue in my district was a contested water rate case; was pending over 4 years before consensus met; how would you handle contested water cases like this?
- Water utility rate review contested cases is something PUC has struggled with and must get our arms around moving forward; may come up in sunset review
- Duty to adjudicate these things in a timely basis, question of appropriate allocation of resources and retaining key staff; taking a look to enhance efficiency
- Paxton – Important to hear you say that; what are your thoughts when it comes to cybersecurity as we look at Texas as a player in the world?
- Function that ERCOT takes deadly serious; security overall has been repeated topic of legislature
- Gird security council requires PUC chair, ERCOT, and possibly governor’s office to update you on what we are doing in a synthesized manner
- February proved we are somewhat autonomous within US grid; obligation to work with partnered organizations to ensure there are no gaps in security
- Miles – Knowing what you know today about what happened in February, what would you have done differently?
- There has to be extenuating circumstances or data held by ERCOT that meaningly affected what happened
- Market began failing and were trying to get all stakeholders to shut down or turn off to free-up power for residential consumers to maintain power
- PUC did everything they could with everything they had in the toolbox
- Storm caused such catastrophic failures within entire supply chain, I probably would have fired every bullet too
- Question of the system wide offer cap; if the number had been allowed to float, it would have done that anyway; the immediate spike is what caused issue
- Gutierrez – In my office, you said the 32 hours of $9,000 and holding was wrong
- With the facts that I know, I cannot say that I would have done that
- Gutierrez – At what point should the PUC chairs be calling the big three during the storm of this crisis?
- Communication should be constant
- Gutierrez – Had a bill in the senate for the price correction, told me in my office that you agreed with attorney general that we had opportunity to be able to ask for price correction within that thirty days
- I believe I said my reading on the Attorney general’s opinion on 39.151 subsection D which grants broad powers to the PUC is not unlimited; in terms of agency discretion there are barriers to be addressed by legislature
- Gutierrez – We have the opportunity to correct within the 30 days, but post 30 days your conjecture was that would likely be difficult for the markets i.e. Wall Street
- Would be difficult for anyone with financial obligations in this
- Gutierrez – You are familiar with Reddit and GameStop and all those other issues happening within Wall Street?
- Companies stock prices jumped?
- Gutierrez – Yes, tremendous market manipulation. Yet, Wall Street corrected themselves and investors lost over 20 billion dollars. You do not have to answer that part
- Gutierrez – You suggested understanding of the $9,000 in holding pattern; could have floated and still incentivized carriers that could produce energy?
- Theoretically yes
- Miles – Just mentioned term “firing all bullets in the gun.” As PUC commissioner would you consider mix between renewable energy, renewable power, nuclear, with gas and coal?
- As an adequate resource mix? Yes
- Miles – Do you think Texas needs to build more electric generation capacity?
- Yes
- Miles – In 1999, when the deregulation happened; would you be willing to look into that as commissioner? I know your ethics to be strong and I pray you stay that way
- Schwertner – 32 hours been a source of controversy and significant cost with this whole disaster; did you just testify that decision was incorrect?
- Yes given the fact pattern I am privy to, but there could be other facts out there
- Schwertner – I agree and PUC is subject to open meetings act; according to Texas law a decision made outside of Open Meetings Act is contestable, am I off base?
- I think an assertion could be made to that effect, yes
- Schwertner – Is important how we bail ourselves, our communities, our citizens out of this; honored to have presented you, believe you will bring integrity and experience.
- Miles – I hope that you are looking at yourself as a change agent as you take this on; hope you are not afraid to lead the change with consumers as our main priorities.
No Public Testimony
Committee Favorably recommends the Senate confirms 129 Nominees (8-0)