The Senate Chamber gaveled in for a second time today and passed SB 2142 (Hughes) with 27 ayes, 3 nays, and 1 absent. Below is a summary of the remarks as the bill was laid out in the Senate. SB 2142 will now move to the House for further deliberation.
This report is intended to give you an overview and highlight of the discussions on the various topics taken up. It is not a verbatim transcript of the discussions 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.
- Bill laid out on second reading
- Directs ERCOT to address pricing errors, using scarcity price versus market price
- $9k cap remained despite load shed no longer occurring; for 30 hours ERCOT was no longer in scarcity but charged scarcity pricing
- ERCOT independent market monitor (IMM) suggested making this correction
- If PUC not willing to direct ERCOT, we can direct by statute already in place
- PUC chair said he doesn’t believe he has the authority; it falls to legislature to clarify the PUC has that authority and should exercise it
- Bill does NOT make changes to statute
- Lucio – thanks members and Lt. Governor for leadership, quickly is keyword so we can get on right path
- That’s right
- Bill does put very tight timelines in place
- Commission would be directed to take action right away, no later than March 20th
- Menendez – PUC is agency of the state; have multi-billion dollar mistake and bill just says fix mistake
- If we don’t fix it the rate payers will bear the burden
- Important that everyone remembers all the people participating in the system as sophisticated investors and know the rules
- Going by the rules
- Menendez – Is it correct scarcity range was held in place by one person
- Believes so
- Realize ERCOT wanted power back on, but need to acknowledge the mistakes
- There was no need to keep pricing at $9k because producers were in
- Ancillary services cascading to even higher rates because of cap
- Menendez – passing bill tells them go fix error, believes PUC has authority but they didn’t believe it so this bill adds clarity and puts it back in their lap
- Yes
- Hall – this is an error that should have already been corrected; real losers will be citizens if we don’t address
- Yes, stated it perfectly
- Schwertner – this is something we have to fix; error is error and it began with bad judgment of CEO of ERCOT Mr. Magness
- Cap has rarely been used; extraordinary to peg price at cap and continue to hold it after out of load shed
- Schwertner – does not see bill as repricing but a billing error bill, would like more details on IMM concern of adverse economic effects
- Cascading bankruptcies
- Consequences of not taking action are so severe
- Schwertner – market price would have been correct methodology but did not follow advice of IMM?
- This proposal is righting the ship
- If not in load shed, should not have been at cap
- This is an error that needs to be corrected
- Schwertner – this legislation just directs ERCOT to do what they should do for people of Texas, correct price and make it the right price
- Under rules when price is published – wants them to follow rules in this case
- Schwertner – ERCOT CEO was in a difficult situation that demonstrated repeated failure of leadership; error compounded by PUC commissioners; both of things should not be allowed and they should not stand for those and legislation addresses
- Agree
- West – not on the committees with debates but have been listening, wants to clear up and get understanding; discusses chain but there was a financial error and wants to know impact on the system
- Billions of dollars, lost value if don’t fix it that would be ultimately born by people of Texas
- West – can we quantify loss?
- Over $3 billion, there is a gross amount of $16 billion – can say its billion of dollars
- West – we had discussions about gas prices?
- There was testimony on it
- West – cap was increased to $9k and then gas was flowing
- Mistakes made had far-reaching consequences
- West – gas companies said we can’t provide you gas and then when cap went up the gas started flowing
- Believes him, didn’t hear all the testimony
- West – lets make sure we don’t lose sight of possible collusion with gas producers, heard there were gas producers contacting generators saying they could not provide it but once the cap was up at $9k it was flowing; need to further look at this and see if there was collusion and claw back those funds if it happened and hold them accountable
- So many things, this bill is about preventing further harm
- Agree still need to go back and fix the system
- Perry – following up on West conversation; philosophical debates need to occur; supports the bill
- Perry – there are hard costs that generators are paying for, as we readjust price then we can create a worse situation and this shifting may help some and hurt others; if don’t get backstop conversation going to see harder issues occur
- Perry – believes readdress of pricing is important but if get it so low you create a problem
- Paxton – agrees with Perry the situation is complex, gives metaphor asked about addressing error and critical to act quickly
- Still within 55 day time that everyone knows it is not final yet, but getting close
- Hall – complex issue that goes beyond just this one part they are now addressing; whole thing came about because they have a system that is less reliant and reliable than what we need and need to address the underlying cause
- West – agrees it is a complex issue; AG has the power to conduct an investigation as to whether or not there was any collusion
- Believes that is correct
- West – need to confirm if AG can conduct a collusion investigation and it is in the interest of the State of Texas
- Believes so and yes
- Anyone breaking law should be held accountable
- Lucio – If gas operators said they could not supply, is there a watchdog to see what capacity they had in the supply of gas
- RRC handles natural gas, doesn’t know details and it is beyond the scope of this bill
- But need to know
- Lucio – if this happened then AG takes over to make sure there is due process
- Huffman – legislation is an order to PUC that they shall order ERCOT to correct prices and reflect market prices; her understanding of legislation is that they are telling the PUC to take action since he said he thought it was illegal for him to take action on this issue
- Huffman – this legislation does have the force of law; and telling PUC this is not illegal
- This is correct
- Bill directs PUC to follow law and perform their duty; Commission has complete authority
- Huffman – doing the right thing and everything they can as a Senate to correct this injustice
- Gutierrez – parliamentary inquiry, can the body be added as joint authors
- This can be done individually, not typical for legislation as a whole
- Hughes – moves passage to engrossment
- Bill passed to engrossment
- 3-day rule suspended
- Third reading and final passage 27-3 (3 nays: Creighton, Eckhardt, Hancock) Note: Sen. Miles was absent
