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The House State Affairs committee met on April 8 to discuss a number of items. This report covers HB 1416 (Capriglione), HB 1501 (Dean), HB 2578 (Leach), HB 3435 (Smithee), HB 3624 (Deshotel), HB 3627 (Paddie), HB 4378 (Paddie), HB 4466 (P. King), and HB 4502 (Vasut). Handouts for the committee can be found here; the video archives can be found here and here.

 

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.

 

Vote Outs

CSHB 1505 (Paddie) (10-0-3 absent)

  • New committee substitute
  • Changes old replacement cost provisions which requires the broadband provider to pay for replacement in very specific circumstances; based on FCC rule
  • Nothing in the bill will regulate pole attachment fee; just that it is reliable
  • Includes FCC pole attachment safety standards

 

CSHB 2683 (Canales) (10-0-3 absent)

  • New committee substitute
  • Includes corrected language regarding a drafting error
  • Includes clarifying amendment language

 

SB 632 (11-0-2 absent)

 

HB 2558 (Capriglione) (8-3-2 absent)

 

CSHJR 72 (Leach) (10-1 PNV-2 absent)

 

CSHB 1950 (Slawson) (9-1-2 absent)

 

 

HB 1416 (Capriglione) (CS) – Relating to the definition of business day for purposes of the public information law

  • Updates “business day” definition in statute
  • Government facilities are not acting on public information requests because offices are physically closed but the workers are working from home; records are accessible remotely
  • Includes business day, other than weekend day, holiday, and skeleton crew days
  • 124 days a year, currently, are not counted as business days; 1/3 of the year
  • CS fixes a drafting error, referenced incorrect statue
  • CS also allows exceptions for institutes of professionals in higher education who are subject to school holidays
  • Harless – How many days are considered holidays?
    • 124 that are not considered business days
    • Public institutions are considering not-in-the-office as business days, which closes off public information requests

 

Jaie Avila, Self – On

  • Skeleton crew, minimal staff exception, has hindered public access to information
  • Made request on July 1, heard nothing until November 1, still have not received records
  • Private businesses quickly adapted to the pandemic, the same could be done by government agencies

 

James Quintero, Texas Public Policy Foundation – For

  • Data and records ordinarily available were not accessible for the public, public has no way of checking government
  • Public information requests are still be denied because of COVID operations
  • Despite fact that Dallas is currently closed, the adopted budget has showed a spending increase
  • People insist on remaining informed

 

Capriglione, in closing

  • Constituent story: school would not send information in October 2020, though schools were functioning

HB 1416 left pending

 

HB 1501 (Dean) (CS) – Relating to certain regulations adopted by governmental entities restricting the use of natural gas or propane

  • Similar to HB 17 (Deshotel) in protecting consumer energy choice
  • 50 cities around the country have tried to ban natural gas and propane as a source of energy; cities with these bans have indicated their next step will be outlawing the appliances through building code
  • HB 1501 protects the appliances specifically

 

Cyrus Reed, Lonestar Chapter Sierra Club – Against

  • California and Colorado have leaned toward electrification but we have not seen that in Texas
  • Language is too broadly written; incorrect interpretation could make political divisions in cities too polarized to promote energy efficiency
  • Recommendations are similar to that of HB 17 testimony

 

Dean, in closing

  • We have possession of an Austin plan that predicates 2030 building changes, forcing commercial buildings to find another energy source other than gas

HB 1501 left pending

 

HB 2578 (Leach) (CS) – Relating to the comptroller’s establishment and operation of a public information Internet website

  • People of Texas have right to information, requires placement of public notices in newspaper
  • Notices are currently found in classified ads, charging the government the lowest rate for advertising
  • Bill is not intended to attack newspapers of any size, but Texas is behind the times and missed opportunities in the past for innovation
  • CS designed to bridge gap by creating system that leverages inexpensive technologies to spread notice more efficiently
  • Good start to conversation, open to changes
  • Raymond – Rural Texas has difficulty with internet access. Would your bill keep the notice in the newspaper?
    • Creates public information website; any notice that is required to be published could be posted to the website.
    • Would require the website to be user friendly with search options
    • Option to still use local newspaper, but not mandatory
    • A local political subdivision would do everything they can to keep their locale informed and could have information both online and in print
  • Raymond – Your concern is that people should have two options; I am concerned about those that do not have an internet option
    • I agree with your concerns; the bill is about leading the way for public information
  • In other states, there are partnerships with newspapers and political subdivisions to provide comprehensive, adequate notice
  • Raymond – Concerned about smaller towns; I do not object to the concept of this bill. We have a ways to go in reference to broadband

 

Bill Patterson, Texas Press Association – Against

  • Media companies are meeting the readers/consumers by creating online formats and e-replicas of newspapers
  • Our public notices are online, there are links on our apps
  • Public notice budget was seven ten-thousandths of our city budget; do not believe government could do much better
  • Shaheen – How does someone like me, not subscribed to any newspapers, get my public notice
    • Governmental website if they choose to put it up
  • Shaheen – Why would you object to this bill if there is a large population that are not subscribed
    • I do not contest more entities to providing public access; more is better
    • Bill language gives an “or” option, which could cut off access to newspapers
  • Shaheen – Government would decide which avenue to send information; do you think you know better distribution? Sounds like your position is not “more is better”. Bill is creating a public notice website option
    • They have opportunity now to post it on a website; I object to the option to exclude newspapers
  • Shaheen – You think newspapers are the most efficient source of public information for the whole state of Texas?
    • Newspaper and adjoined website is a strong option
    • Citizens of community that read and subscribe to newspapers are more active in community and politics; removing newspapers would hinder that population
    • Shaheen – Notices in newspapers are not being removed; the accessibility is being broadened with more avenues
    • Shaheen – Shocked that a news organization does not want to spread the news
  • Smithee – Texas is a very diverse state; some of my constituents do not have access to internet or cell phone coverage and small-town papers are thriving. In those communities, it is probably the best way to extend that public information. If you leave it totally up to governmental entities, it could be a biased distribution. Must be careful that this law equally covers all of Texas
  • Raymond – You want to do everything possible; do you support the provision of the bill that creates a website for public information?
    • Yes, we need to reach more people
  • Raymond – More avenues, not fewer. My concern is that there would be fewer avenues. You are not opposed to establishing the website; opposition is giving the governmental entities will have an out to hide information from certain demographics
    • Correct; we also have a statewide portal
  • We have an actual cost associated with coverage of these notices

 

Regina Keilers, Texas Press Association – Against

  • I live in a rural community; newspapers are equitable
  • Provides anecdote about public notice; if notice was only posted on government website, our community would not have seen it or fought against
  • Howard – How much do we force things into a certain medium when we know our society is moving towards digital. It is the public’s right to have this information; things happen under the radar that directly effects our lives
  • Paddie – Lagrange, population 5000; What is your circulation?
    • 4500?
  • Paddie – Do you use social media?
    • Yes, with a website with a link to public notice

 

David Billings, Mayor of Fate, Texas – For

  • We are not trying to eliminate newspapers, but would like the user friendly website
  • If the newspaper makes a mistake in writing or timing, that could put us in a dangerous position

 

Wesley Lewis, Texas Press Association – Against

  • No more efficient and effective source of information than newspaper; we remained an essential service
  • Moving to online only impact will cut off 9 million Texans that do not have access to internet
  • People need to proactively seek it out online, whereas the newspaper brings it to you
  • Print vs online issue presents false dichotomy; we post online and resource texaslegalnotices.com
  • Newspapers are a third party oversight and record keeper
  • Governments are getting a bargain price to publish these notices

 

Terry Henley, Texas Municipal League – For

  • Looking for options
  • My estimation for the cost of running public notices in all newspapers across Texas is around $100 million
  • Newspaper circulations are dropping 10-15% a year

 

Tom Moore, Daily Court Review – Against

  • Provides anecdote concerning Harris County Constables; since the current statute passed, we have never raised the rates
  • Embraced digital technologies, easy to use, access and search; we post all public notices on social media
  • We provide third party check and transparency

HB 2578 left pending

 

HB 3435 (Smithee) – Relating to an expedited response by a governmental body to a request for public information

  • Bill is in response to the growing number of public information requests state agencies are receiving
  • State agencies and officials have increasingly referred requests for information to the OAG – up to 25,000 per year
  • Taking longer and needing more resources to process the volume of requests
  • Bill would create a procedure that allows agencies to refuse TPIA requests based on precedent and completion of a specific education course by agency officials
  • Individuals can appeal the refusal to the OAG, but this bill would significantly reduce the burden on the OAG
  • Still working with stakeholders to iron out points in the bill

 

Stacy Allen, Texas Association of Broadcasters – On

  • Discussing with the OAG and Rep. on concerns about the bill
  • OAG currently believes about 1/3 of requests are unnecessary and by precedent will always be ruled out, but most referrals to the OAG are by local governments
  • Law already allows for denial of TPIA requests based on law
  • However, there are some entities to act in bad faith by requesting the OAG review a TPIA request as a delaying tactic
  • Entities take advantage of the reporting ability to prevent public disclosure
  • Recognize the OAG has a real stake here, but bill should focus on discouraging bad faith referrals from entities to prevent the abuse of the system and the public
  • Extra time built into the process by the bill would allow bad-faith entities to stonewall even more than they currently can
  • Raymond – Is there a reason you don’t want to be listed against the bill?
    • No, we believe we can make the bill better and more responsive to concerns
    • Condition of the bill can be improved
  • Raymond – Is there ongoing discussion of the bill?
    • Yes, working with members of the AGs office and with Rep. Smithee
  • Smithee – Need to work on improving the AG’s workload while keeping the open records process intact
    • Broadcasters have had very rare denials of their requests as frivolous or incorrect
    • Bad actors are abusing the system, not requestors

 

David Billings, Mayor of Fate, Texas – For

  • Looking for clarification of the process for responding to open records requests
  • Intent is to be as efficient as possible in responding to requests
  • Would like language to include exclusion of information publicly available, such as on a website operated by the government, that would allow us to deny those requests and redirect them to the information

 

Zenobia Joseph, Self – Against

  • Personal anecdote about the bureaucracy of the TPIA request process, and the extent to which the AG had to get involved personally to get information released
  • Against the bill based on right to academic records and FERPA
  • Raymond – Did you get what you needed?
    • No, just redacted records and my own emails

 

Justin Gordon, Attorney General’s Office – On

  • Several types of rulings that we can make on a request
  • Many times, the Open Records Act requires entities to request a ruling from the OAG
  • There is also a statutory defense against prosecution if an entity requests a ruling
  • Fastest we can handle rulings still takes a lot of time
  • Appeal should take only a short time to complete under the bill using electronic filing
  • Specific exceptions must be identified for redacted portions of documents released under a request

 

Jay Root, Self – On

  • Has spent 30 plus years as a reporter
  • Unilateral withholding and redactions should not be encouraged
  • Describes experience with a redacted contract from DSHS and MTX company on contact tracing; a lot was hidden in the censored version of the contract
  • This bill gives more power to censorship and redactions by entities without OAG approval
  • Howard – You said the vendor did the redaction?
    • Yes, MTX redacted
  • Howard – Is that typical?
    • I was reporting on a story, and found a confidential source with an unredacted copy of the contract, and I received a redacted copy as well direct from the agency
    • Not typical the vendor redacts the contract
  • Raymond – Are there other examples where you pushed for less redacted documents from entities?
    • I have gone through the process to get unredacted or less redacted documentation – AG oversight and rulings are necessary and important
  • Smithee – Waiting for 60-90 days to get needed information is bad for reporting and transparency, any advice for improvements?
    • Interesting question because a lot of small entities like localities and counties may not understand the process, makes sense for OAG ruling, but abuse can be prevalent
    • Might want to look at ways to regulate entity requests

 

Laura Prather, Freedom of Information Foundation of Texas – Against

  • Have been working with Rep. Smithee to address concerns with the bill
  • Goal is to increase openness and transparency
  • Abusive entities have never been addressed by the legislature

HB 3425 left pending

 

HB 3627 (Paddie) – Relating to the authority of a governmental body impacted by a catastrophe to temporarily suspend the requirements of the public information law

  • Makes clear catastrophe does not include times when staff work remotely but still have access to the information being requested
  • Suspensions are limited to one per catastrophe, and the issue must prevent them from completing the request
  • Bill provides guidelines for more flexible working environments for the future

 

Jay Avella, WOAI TV Reporter – On

  • COVID pandemic led to more resistance to TPIA requests by entities
  • Author of catastrophe exemption bill, Sen. Huffman, concerned about the way it is being abused by entities during the pandemic
  • Meant to press the pause button on requests, not meant to shield entities from answering requests

 

Jessica Priest, Self – For

  • Reporter for Fort Worth Report, formerly for USA Today
  • Bill clarifies the number of catastrophe notices permitted to entities
  • Only 2 agencies pre-pandemic used catastrophe notices, but in April 2020 89 entities had filed catastrophe notices

HB 3627 left pending

 

HB 4502 (Vasut) (CS)– Relating to cost recovery for costs arising from the interconnection of certain electric generation facilities with the ERCOT transmission system

  • Currently generator interconnection is socialized and paid for by consumers, not by generators
  • Does not incentivize generators to locate their facilities in more “reasonable” areas that may reduce interconnection costs
  • Bill allows PUC to determine a “reasonable allowance” for interconnection; anything above that cost must be covered by the generator

 

Charlie Hemmeline, Texas Solar Power Association – Against

  • Bill represents disincentive to future investment of solar and other renewables
  • Concerned with piecemeal approach that raises construction costs and does not offer an incentive, like no congestion costs
  • Not aware of any reports or data about this perceived problem
  • Entities already help direct site selection for generation sites
  • Hunter – Who pays under the bill?
    • Still some uncertainty
  • Hunter – But generators pay more under this bill, right?
    • Yes, people will pay more through increased prices and disincentivized investment
  • Hunter – So whether we pass the bill or not, consumers still pay the price?
    • Consumers to pay transmission costs assigned

 

Mark Stover, Apex Clean Energy – Against

  • Have developed around $2 billion worth of projects, approx. 15,000 GW of energy from solar and wind
  • No studies or reports back this legislation or establish a need for it; would end current efficient market process – Competitiveness of Texas power grid is essential
  • Uncertainty and concern high right now due to your discussions; bad for a pro-business state like Texas
  • All conversations with potential investors have stopped
  • Hunter – So you think ERCOT is reliable?
    • Yes
  • Hunter – Then what about the storm? How is it reliable?
    • I am not discussing the grid during the storm
  • Hunter – And you believe we should stick with the grid?
    • No, want to stick with the market system that has been in place for years

 

Jason Ryan, Centerpoint Energy – For

  • In favor of the CS version as strikes the right balance
  • Interconnecting generation with the grid is what we do; the CS is a workable solution

 

Katie Coleman, Texas Association of Manufacturers – For

  • Supported customers paying for interconnection fees when we deregulated Texas’ market
  • Since then, we have shifted away from primarily thermal resources that site close to load and towards renewables which site more remotely
  • Substitute sets an allowance that creates development incentive without providing a blank check cost to customers
  • Paddie – How does siting work?
    • Siting close to load has some advantages, and renewables do not necessarily need to site remotely to get similar output
    • PUC will need to examine variety of factors to set the allowance, including peak output and reliability

 

Jeffery Clark, Advanced Power Alliance – Against

  • Departure from what we have done in the past
  • Move in the right direction, but the devil is in the details
  • Reasonable allowance is subjective
  • Adds costs to being new in the market – competitive disadvantage
  • Need to ensure that we do not change the economics of projects currently about to be built
  • Want to continue work on the bill to improve it
  • Hunter – I am looking for legislation where the cost does not get passed onto the consumer. Work with the author and make sure you get your input in
  • Harless – Consumer will pick up the cost in fees?
    • I think that any system will lead to consumers paying the costs of operation and construction
  • Harless – How does this hurt new generating facilities?
    • Power purchase pricing – new facilities would need to invest significantly more in construction due to the fees associated, and old facilities would not have those fees under this legislation

 

Michael Jewell, Solar Energy Industries Association – Against

  • New generation needs to site where resources are; these issues follow throughout the industry

 

Brent Bennet, Texas Public Policy Foundation – For

  • Support lowering transmission costs for consumers
  • Bill is a step towards lowering costs and encouraging efficient siting
  • CS levels the playing field for new and old generating facilities

HB 4502 left pending

 

HB 4466 (King, Phil) – Relating to the responsibility for ancillary services costs incurred for the operation of intermittent wind and solar resources

  • Wind and solar development have been successful and have grown significantly largely due to provided subsidies
  • Our renewables are not the startup they were over 20 years ago; now a mature group of market participants
  • Intermittent nature of solar and wind is pushing ERCOT to purchase more ancillary services and replacement generation due to gaps between expected output and delivered output
  • Bill would require the intermittent generation resources, wind and solar, to secure ancillary services and replacement generation from the market, rather than have the entire market pay for ERCOT purchasing those services
  • Direct and market-based approach to securing stopgap measures
  • Bill directs PUC to hold public rulemaking to create the methodology necessary to implement the legislation
  • Deshotel – This will hurt renewables irreparably. Other generators are intermittent at times, and it should be treated that way
    • This is not relating to the winter storm, this is relating to a day-to-day issue with renewable energy falling short of projected output
  • Deshotel – Are we using ancillary power, if so how much is it costing?
    • Every day, one estimate puts it about $100 million per year
    • Worth the rulemaking to find out what the numbers actually are, but it is a problem that has existed and will increase in severity
  • Deshotel – Would the rule consider plants that go offline, like gas or thermal, intermittent?
    • Yes, if they give an expected output they don’t meet they are responsible for the ancillary power and power costs
  • Deshotel – Seems like punishing companies for natural forces outside their control
  • Howard – Who currently pays for ancillary power?
    • Uplifted and socialized to the entire ERCOT grid
  • Howard – Doesn’t everything we are talking about eventually passed on to the customer?
    • Yes and no, ERCOT uplifts some things, some things get paid directly
  • Howard – Who uses ancillary services?
    • Primarily purchased to balance the frequency of electricity at 60 megahertz
  • Howard – How would this have prevented the blackout?
    • It would not have, this bill is not about Storm Uri, its about the market model of ERCOT and energy
  • Paddie – Concerned about impact on current contracts in development/on track for construction
    • Can consider currently-in-development generating facilities and contracts and adjusting the bill
    • Business needs certainty, which is why we need to take this slowly and do it right

 

Charlie Hemmeline, Texas Solar Power Association – Against

  • Ancillary services critical to ERCOT and continuing functioning of grid
  • Bill takes a narrow view by focusing on wind and solar – needs to look at full range of services
  • All generators are intermittent no matter the fuel
  • ERCOT already accounts for intermittency of all power generators in its scenarios
  • Solar impact on ancillary services procurement is small – in fact, solar is set up to begin providing ancillary services
  • Tech-neutral policies creates better certainty, reliability, and lower cost

 

Cyrus Reed, Lone Star Chapter Sierra Club – Against

  • Ancillary services are products to sustain ERCOT grid in the right range
  • The market for ancillary services can be provided in a variety of ways, and its an efficient market
  • Around 5,000 megawatts of ancillary services this year
  • Reasonable to ask the PUC to examine this issue, but this bill directs PUC to do that for only one resource, but loads can be variable as well

 

Jeffery Clark, Advanced Power Alliance – Against

  • As government phases down PTCs it is built in to the price of the power
  • Wind makers are not making huge profit – baked into PPA
  • $60 billion worth of energy contracts and investment
  • Negative pricing is a function of congestion and overfull power rather than choice by wind generators
  • When we do not perform, we procure power in the market, just like everyone ese
  • Penalties for renewables when we do not show up, but not for other fuel types
  • Unworkable – handing an unnamed PUC a blank check to assess and judge contract
  • Every generator creates need for ancillary services – if we going to assign costs to generators, they need to be signed in all areas
  • Going back on $60 billion worth of investment – global laughingstock
  • Not impossible to predict need for ancillary services – need has stayed flat
  • There are subsidies for every sector in this market, unfair to only get rid of those for renewables while maintaining them for the rest
  • Winter storm showed how every generator procures power from the market when they fall short – not unique to wind and solar
  • Unique loads and spikes in demand can lead to generators not meeting output projection or needing to purchase additional power
  • Raymond – We have heard so much about securitization and repricing due to uncertainty and the markets, this bill just seems to add to the problems of not securitizing; seems to target solar and wind unfairly

 

Katie Coleman, Texas Association of Manufacturers – For

  • Many members are MPPAs with renewables and own solar/wind facilities
  • Bill is about accountability, need to be held to reliability issues and impact on the grid
  • Do not want punitive outcomes or discouraged investment in wind/solar, just want reliability requirements for these generators
  • Paddie – What happens with renewables’ process for commitments?
    • Unlike thermal resources, renewables have to tell ERCOT how much they can expect to generate per day
    • If what happens does not match the ERCOT forecast, there are really no consequences by ERCOT, but consequences may happen for private contracts
    • Not very many of those contracts have punitive repayment provisions

 

Brent Bennet, Texas Public Policy Foundation – For

  • Reliability issue during ERCOT was part of the problem, market reform needed to correct
  • Last 3 summers have seen us close to maxing out supply, has to do with market issues
  • The fact that ancillary costs have not increased shows that we are not paying for reliability
  • Market reforms key to value reliability correctly on the grid and also balance out costs
  • Bill could be clearer about reliability requirements, we need to reallocate and expand the ancillary market

 

Michael Jewell, Solar Energy Industries Association – Against

  • Grateful author is willing to examine different language on several issues in the bill
  • Day-ahead market existence for thermal generators means that they do not have to face penalties for underperforming, they also have greater flexibility in adjusting output expectations as soon as an hour before output
  • Renewables do not have those rights/flexibility in output
  • Bill discriminates against wind and solar companies
  • Could create hundreds of “little ERCOTs” around the state

 

Beth Garza, R-Street Institute – Against

  • Ancillary services are a short-term commitment of capacity
  • Demand and output vary minute to minute
  • The system needs to be reliable, not each individual generator
  • Ancillary capacity is a critical part of ensuring systemwide reliability
  • ERCOT assigns output projections to renewables; they do not decide it
  • Historic average of annual costs for ancillary services is $1-2 per MW hour, for about 5,000 MWs
  • Imposing unforeseen costs on a specific service is, at a minimum, discriminatory
  • Wind/solar power capacity has tripled; ancillary services costs have declined
  • ERCOT should continue to discover ancillary services required to maintain reliability
  • King – Are there reliability issues/difficulties with intermittent resources?
    • There are reliability issues with meeting loads that change constantly
  • King – There are fluctuations in wind/solar outputs?
    • Yes
  • King – Are there costs associated with that variability? Are they unique costs associated with intermittent sources?
    • They are different risks and costs, but thermal comes and goes in big blocks (forced outages), wind and solar are variable output, but generally do not disappear in forced outages
    • Costs for the resources are different, neither is more predictable than the other

 

Mike Nasse, South Texas Electric Cooperative – For

  • STEC currently implements a policy like this bill
  • Diverse fleet of generators, but we do not forget the intermittent nature of our wind and solar generators
  • Replacement power is important – when a diverse system is created, you need firming capacity and replacement power
  • We had more energy than we needed during the winter storm outages due to our prior investment
  • Language could use some work, but the author is headed in the correct direction to deal with this issue
  • Refinements in mind can reduce the issues raised and prevent unintended consequences
  • King – Need to keep a high-level view for guardrails, do not want to get “into the weeds” legislatively

HB 4466 left pending

 

HB 3624 (Deshotel) (CS) – Relating to electricity customer rights to distributed energy storage

  • Deshotel – During the winter storm, some Texans avoided power outages due to their battery/solar power systems
  • Bill fills the gaps in the Public Utility Regulatory Act; does not ensure customers have access to resiliency/reliability electric storage can provide
  • Helps expand residential solar storage market; attracts interest from the field to bring more affordable and reliable products
  • Reason there are not these types of systems in place is that the technology that would make this system more affordable/reliable is not here
  • Bill asks that technology to be adopted/reviewed by the Public Utility Regulatory Act

 

Cyrus Reed, Lonestar Chapter Sierra Club – For

  • Would provide customers with local energy solutions close to load; as long as they are under 2 megawatts in the bill, can participate directly or through a third party
  • Is about creating more access/local energy

 

Patrick Bean, Tesla – For

  • Tesla also produces batteries/battery storage for the electric grid
  • Bill can help enable more choices/reliability for Texans
  • Bill untaps potential of distributed generation/storage solutions at customer homes and businesses to provide support for the larger grid
  • Would amend code to allow for a common-sense policy for customers to act as their own powerplants and provide services for others
  • A legislative directive for ERCOT to create rules for the sale of reliability services from aggregated retail customers will lead to additional investments/innovations
  • Adds a definition to PURA for customer distributive energy storage and those who may own
  • Changes another section in PURA would cement ability of retail customer to install systems
  • Raymond – Makes a joke about making a Texas version of a Tesla

HB 3624 left pending

 

HB 4378 (Paddie) – Relating to the supply of power and the financial stability of the competitive wholesale and retail electricity markets

  • Paddie – Would require the PUC to adopt rules to adopt rules in response to price signals, procurement, moderate price volatility and ensure reliability of power supply
  • Commission shall require risk-weighted analysis and ensure costs are equitably apportioned
  • Not sold on a capacity market, or any alternatives at this time; but is important to engage in consideration for what the solution will be
  • Are ultimately talking about reliability; market has served us well, but recent events exposed weaknesses/issues
  • Is an opportunity to have some discussions to see if tweaks are needed; could be major or minor
  • If you think there is no solution, then you are misinformed or are benefitting from the status quo

 

Cyrus Reed, Lonestar Chapter Sierra Club – Against

  • Is a good conversation to have, but opposed to current bill
  • HB 11 and another bill about weatherizing the fuel supply will both help with the grid failing
  • Another bill on transmission loss, a Darby bill, will also help the system
  • A lot of investment is currently coming into the state
  • Need to look at ancillary services and if we need more products; believes we need a more flexible 6-hour product
  • Need different products to compete in the market; significant resources gas, solar, storage closer to the load that could help
  • Cannot forget the demand side; could require utilities to meet higher energy efficiency goals or create a market for energy efficient products/demand response
  • Peak demand in summer and winter are mainly residential and small businesses; solutions would be weatherizing homes and provide other products

 

Tim Morstad, AARP – Against

  • Supports intent of improving reliability, opposition is based on vagueness of the bill and what it could become
  • Unclear what the supply/capacity measures are; assume the bill will support capacity markets
  • Capacity markets could increase consumer costs, can overshoot, and are highly susceptible to companies who have the market share
  • Other solutions would include requiring transmission/generation planning for the winter and summer
  • Could require retail electric providers to have reserves
  • ERCOT could fill the void if there is insufficient capacity; could put out an RFP for installing new reliability/generation unit and incentive to build it would be lifted to the market
  • Are many high-dollar proposals for reform; increasing reliability is a part of the solution
  • Raymond – Have you worked on specific language that we could put in legislation?
    • Could get that to you

 

Thomas Brocato, Texas Coalition for Affordable Power – Against

  • Bill directs commission to create rules that would create a capacity market
  • Capacity markets produce higher prices; bill could cost the market $5-8 billion a year
  • Capacity markets are not more reliable than our current market
  • ERCOT has announced will have a 15.5% reserve margin for this summer; have shown they can already have the ability to adjust
  • There is a place for demand side management; legislature is addressing fuel side
  • Legislature should set a requirement for certain standards and the commission could establish rulemaking to meet that standard

 

Beth Garza, R Street Institute – On

  • Here to caution against making “rash” actions, supports the intent to have conversations about solutions
  • Installed capacity markets have pros and cons; after a similar storm in the NE, they moved their capacity market design toward an energy-only market
  • Has been a lack of focus on the demand side; demand was high because houses are built for a warmer climate
  • King – Had inability to surgically do outages; Smart Meters were put in with the intent to do that, technology is there but has not been paid for/implemented
    • Completely agrees; need to weatherize systems and better manage distribution system
  • King – Is not the TDUs fault, but we did not invest in that
    • Yes, and would allow for future market activity
    • King – Including the ability to pre-program for things like peak hours

 

William VanderWal, – Against

  • Did not testify

 

Chris Whitty, BASF Core – Against

  • Have over 9 plants in Texas; compete for international investments
  • Are never concerned about the energy costs in Texas, and only other competitor is Louisiana
  • Bill adds additional capacity and millions of costs; makes current/future investment less desirable
  • Sees this as a reliability issue, not a capacity issue
  • Will do an analysis to strengthen parts of the plant that could not stay online
  • Is about winterizing not having idle capacity; cannot stay in business that way

 

Edward Stones, Dow – Against

  • Are heavily invested in the Gulf Coast; have invested in over $10 billion in new assets/modernization here
  • The bill clearly requires a capacity market; has costs, the wrong incentives, and does not fulfill need
  • Other capacity markets are shifting towards an energy-only market
  • Winter storm was not a capacity issue, was a performance issue

 

Bill Barnes, NRG – For

  • Agree all options should be on the table; NRG testified after the storm that we need to look at market structure
  • Wholesale market has benefits/risks; supports the energy-only market in ERCOT, but the risks must be known by the legislature and the PUCT
  • Existing market design is efficient and unforgiving
  • A centralized capacity market is not the right market structure for ERCOT and would not have prevented the events of the winter storm
  • Current system should stay, but could be supplemented; should continue to have conversations about how to do this
  • Paddie – Elaborate that capacity markets are not the right solution, alluding to a hybrid model?
    • Are envisioning something similar to HB 4466; supplemental capacity procurement in peak seasons
    • Want to define the reliability standard, and the market will follow; need to be vetted by stakeholders
    • Do not support a three-year-forward capacity market in ERCOT

 

Tony Bennett, Texas Association of Manufacturers – Against

  • Texas is home to one of the truly competitive energy markets in the world
  • Storm has exposed grid issues, but continue to support ERCOT’s design; focus should be on reliability
  • Capacity mandates are the opposite of what we are looking for
  • Provides a list of what bill might cost individual facilities: $14.4 million annually, $85 million annually increases, etc.
  • Such significant increases could be a deciding factor manufactures could not build new facilities in Texas
  • Higher costs could abate any tax incentives to get businesses to come here

 

Amanda Frazier, Vistra Corp – For

  • Own nuclear, coal, solar, and gas; operate generation/retail in 5 of the 6 markets in the U.S.
  • Is a competition bill to support reliable power
  • Are not advocating for a three-year-forward market
  • Winter storm was not an isolated event and economy has changed in the last 20 years
  • Electric grid has had exponential growth with intermittent renewable energy; are less prepared than ever for winter events
  • Supports weatherization and requiring critical infrastructure to register
  • Need to address whether we have mechanisms in place to incentive non-intermittent resources to be available/built for the future
  • Current market design relies on scarcity pricing that relies on volatility; market design is not ideal for individuals
  • Energy-only market can be refined to create more reliability

 

Chris Brown, Berkshire Hathaway Energy Infrastructure – On

  • Weather event caused plant failure and indispatchable generation
  • Capacity market would be expensive that would do nothing to address plant failure, and might not address the generation gap
  • Weatherization helps, but does not add additional capacity; DSM can be a part of the solution, but is not sufficient/timely
  • Better solution would be the Texas Emergency Power Reserve would provide incremental generation and a performance guarantee worth up to $4 billion
  • Compared to the capacity market, TEPR would be cheaper, more transparent, and faster
  • Would be 10 fully-weatherized heat tracing 1000-megawatt natural gas plants located where the load was shed
  • Would provide up to seven days of storage to add 10 gigawatts for incremental generation; would be guaranteed to run when demand surpasses supply
  • Regulator would tell TEPR when to run; performance is not dependent on price signals
  • Could be in place November 2023
  • Would be happy to compete in an RFP
  • Shaheen – How does this work alongside work that has already been done?
    • No, weatherization is a good answer; currently there is not enough capacity in the event of an emergency
  • Shaheen – 10 different plants? How long to be up and running?
    • 10 different plans in 10 different locations, November 2023
    • If not up by November 2023, we will owe the $1 billion guarantee
  • Deshotel – If you have to come online, customers get a rebate?
    • Would be a capped $3 charge on their bill; would get a rebate when that revenue was generated because we are not in the market

Michele Richmond, Texas Competitive Power Advocates – On

  • Supports general approach to direct the PUC to examine how to ensure greater reliability and continued investment
  • Are supportive of continuation of the energy-only market
  • Want to add language to make it clear we are maintaining the energy-only market, but are just looking for resources to add to the reliability/cost-effectiveness of the grid

 

Katie Coleman, TAM – Against

  • Capacity market is an expensive solution for the wrong problem; was not a capacity issue, was a reliability issue
  • Bills through this committee already address some of these issues
  • Would be open to looking at target approach for increased weatherization in the winter
  • Have a proposal at the PUC and a version of it in SB 3 that would address pricing volatility in our market design
    • Need a circuit breaker in events like a natural disaster that cause high capped prices
  • Could also have targeted measures that would allow people to ride through extreme winter weather
  • Howard – Notes that system was not built for 5 days of the $9,000 cap; intrigued by your circuit breaker solution
  • Howard – Need to look at why $9,000 and what do you do when something prolongs it
    • $9,000 is supposed to be an incentive to protect themselves
    • Was an approximated price by the PUC that determined that was the price people would not want to pay
    • Price has worked well in summer reliability situations
    • When it is clear neither side of the market can do what it needs to do, need to eventually lower the cap with possible payments to recoup
  • Paddie – Could you give examples of targeted reliability services?
    • Could procure seasonal reliability/ancillary services, emergency response service, black start services, dual fuel capability, etc.
    • Could buy those characteristics rather than asking customers to buy entire powerplants
    • Berkshire proposal could be done through market plants; incentive for on-sight storage

 

J.P. Urban, Association of Electric Committees of Texas – On

  • Not sure what the right solution is, but encourage a thoughtful discussion about the market
  • Have seen dramatic changes fleet and fracking that have changed the wholesale market
  • Want to ensure the market meets the legislature’s standards; will operate within them once they are set
  • Raymond – Are you saying no comment because the bill is too broad?
    • Not sure what the right answer to our problem is; want to be a part of the conversation
    • Raymond – So you want to work with us to help us propose solutions
    • Yes, want to have a better understanding what the expectations are

 

Paddie, in closing

  • Is just an opportunity to dig into this and figure out some solutions
  • Raymond – If we are moving forward on securitization bills, should seriously consider making weatherization investment now
  • Raymond – Would maybe be a big enough solution for this session, this bill’s bigger discussion could possibly come in a later session
    • Weatherization/securitization are important; to do this justice, we need to commit to a long-term discussion on tweaks to the market