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The Senate Business & Commerce Committee met on June 29 to hear invited and public testimony on the following interim charges:

  • Monitoring the implementation of House Bill 5 and House Bill 1505, 87th Legislature and discussing anticipated federal infrastructure funding dedicated to broadband initiatives.
  • Reviewing the Texas Universal Service Fund and reporting what, if any, changes should be made through a review of both the fund’s contributions and disbursements, as well as the impact of technology on the long-term stability of the Texas Universal Service Fund.
  • Monitoring the implementation of House Bill 2911, 87th Legislature, relating to next generation 9-1-1 service and the establishment of a next generation 9-1-1 service fund.
  • Studying issues impacting the Texas electric grid, including weather preparedness and the natural gas supply chain and evaluating potential benefits of real-time transparency of the intrastate gas market with respect to the functions of ERCOT and the Texas Energy Reliability Council.

 

A link to the full meeting agenda can be found 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.

 

Opening Comments

  • Chair Schwertner – Start with broadband charge first, will follow with electricity charge
  • Concerning broadband, will discuss HB 5 passed last session, Universal Service Fund, and deployment of NextGen911
  • Will also discuss new Gas Supply Chain map from RRC/PUC and weatherization rules from SB 3 87(R)
  • Will discuss intrastate gas market to ensure reliability of the state’s grid

 

Monitoring the implementation of House Bill 5 and House Bill 1505, 87th Legislature and discussing anticipated federal infrastructure funding dedicated to broadband initiatives.

 

Gregg County, Director Broadband Development Office

  • Committee has been provided the state broadband plan and other presentation items
  • HB 5 87(R) created BDO and the mission is to close the digital divide
  • Were tasked with development of state’s broadband plan, creating a federally compliant grant program, establishing a broadband availability map
    • Recently published the state’s broadband plan which will be added to and given more detail in the future/with more funding
  • HB 1508 87(R) broadband pole replacement program remains unfunded due to guidance from the Treasury saying the CPF cannot be used for pole replacement funding
  • Federal funding streams:
    • CPF allocated $500.5 to Texas and $75m of that was allocated to broadband pole replacement program – which cannot be used
    • Estimate Texas’ BEAD share to be between $1-$4b dollars
    • Estimated $7-$100m in digital equity funding
  • Chair Schwertner – Does new deployment have to be fiber?
    • HB 5 created BDO to be technologically agnostic; new federal rule changes in BEAD and CPF prioritize fiberoptic end-to-end technology
    • Each state proposes their threshold on the cap cost of a fiberoptic project; would then provide ability to choose another project that could be cheaper
  • Chair Schwertner – Asks about the threshold cap
    • BDO and Comptroller’s Office plan to send letter of intent of that cap to the Treasury by July 18
  • Nichols – Last minute rule changes for the federal funding prioritizing a certain technology; would leave large areas of rural Texas without broadband
    • Currently a two-year wait for fiber cable and a lot of the infrastructure needs to come; will be a lot of strain on the supply chain
    • Also, timeline constraints; CPF funds need to be expended by 2026 and IIJA has a four-year timeframe to spend funds
  • Nichols – Appeals process on that prioritization ruling?
    • NTIA has a one-off exemption on components for each project; will have opportunities to make recommendations through the process
  • Nichols – Different federal definition of speed for rural versus urban; our plan would be minimum 25 over 3; think they will raise that speed?
    • Yes, clear the federal government thinks that is not a significant enough speed
  • Nichols and County discuss the digital divide and its effects during the beginning of the pandemic
  • Nichols – How do you think supply chain issue will impact cost and timing of implementation?
    • There is a two year wait for fiberoptic panel
    • The infrastructure needs to come from domestic sources; will strain supply chain
  • Nichols – Is there an appeal process on the ruling?
    • You would have to appeal each program; we will make recommendations through NTIA
  • Nichols – Do you think the federal government will increase the minimum broadband speed?
    • Yes, CPF and NTIA already increased the minimum to 120
    • The current minimum is from 2015
  • Nichols – What is the urban rural digital divide like?
    • We heard similar stories from both urban and rural families
    • BDO looking to bridge any gaps going forward
  • Johnson – Asks for clarification on regulations

 

Jennifer Harris, Connected Nation

  • Focuses on bridging digital divide
  • Texas improved broadband planning and development over last several years
  • Texas can get 11 million by applying to federal government; Texas likely to receive the most funding
  • Need to ensure BDO has ability to apply for and use federal resources
  • Submissions for grants required by July 12, July 18, and September 24
  • HB 5 written to be technology-neutral; not all technology will meet requirements of bipartisan infrastructure bill
  • NTIA will look at Texas’ five-year plan to see how we will get every Texas online
  • Johnson – How much federal money can be used for non-infrastructure?
    • We will probably receive 70 million to focus on affordability, devices, and digital skills; we should also use state funds
  • Nichols – Are other states upset about the shift from technology-neutral to fiber technology?
    • There are concerns over supply chain, but we think there is flexibility for states to use other technologies
  • Nichols – Are you planning to send an objection letter?
    • No

 

Luis Acuña, Texas 2036

  • Led initiatives to close digital divide
  • Published report in May
  • Low earth unbanning satellites provide competitive option to close digital divide in very rural areas of the state; supports Comptroller’s technology-neutral stance
  • Advise against overcorrecting state’s broadband program; need to work with federal government to make program work for Texas
  • Supports state appropriation for funding; used for conflict with federal government and for federal 25% match requirement
  • Recommends underserved definition in state program
  • Encourages state to work with local governments to streamline processes
  • Recommends improving middle mile networks

 

Julia Harvey, Texas Electric Cooperatives

  • Organized initially in rural areas; members today provide broadband services in rural communities
  • Supportive of HB 5 87(R)
  • Federal funding historic opportunity to improve rural communities
  • Deployment of broadband can be economically unfeasible; funding would allow Co-ops to implement and deploy
  • Opposed HB 1505 87(R) because shifted cost onto rural electric consumers; worked on alternate bill
  • Working with broadband providers after HB 1505 87(R) to build partnerships
  • Attaching to electric infrastructure needs to be carefully implemented
  • Nichols – Discusses HB 1505 87(R) pole cost and replacement guidelines
  • Kolkhorst – How will you incentivize hesitant Co-ops to implement technology universally?
    • Sometimes Co-ops come into other counties to help; the funding should help cover areas that don’t offer financial incentives on their own

 

Walt Baum, Texas Cable Association

  • Five cable providers; 5 million broadband subscribers
  • Supported HB 5 87(R)
  • Attended all Comptroller broadband listening tours; provided input to the office
  • BDO must consider applicant quality for infrastructure funds
  • Supports serving underserved communities first
  • Agree with technology-neutral stance; needs to be based on speeds
  • Need to address affordability barriers
  • Worked with Co-ops to craft alternate bill to HB 1505 87(R); thinks sufficient funding will be unavailable

 

Charlie Cano, Etex Telephone Cooperative

  • Texas needs universal standards; federal and state funding provides opportunity to implement broadband right
  • Home electronics have short life spans
  • Streaming market continuing to increase in value; technology will become outdated
  • Customer internet usage grown significantly
  • Bury fiber facilities in East Texas; replace technology every ten years
  • In engineering, no technology-neutral
  • ETEX customers benefit from fiber technology
  • Fiber technology less susceptible to destruction in natural disasters
  • Recommends BDO prioritizes high-cost rural areas and analyzes performance data of broadband providers

 

JD Salinas, AT&T

  • HB 5 offers vital economic opportunities for Texas
  • AT&T focused on fiber broadband; already offering multi-gig speeds throughout the state
  • Offers free internet to rural communities; plan offers speeds up to 100 MG
  • Actively participated in broadband listening tour
  • Private sector dedicated to broadband infrastructure
  • Recommends focusing on fund transparency, prioritizing consumer-oriented projects, offering speeds that start at 100 MG, finding alternative solutions to federal funding, and focusing on a long-term funding solution
  • Kolkhorst – Has AT&T been receiving federal funding to serve rural communities? If so, why are so many communities still without service?
    • Yes, some areas are harder to serve than others
  • Kolkhorst – I would like to do an audit on AT&T and other providers on their implementation of broadband
  • MenĂ©ndez – Some people don’t have a choice of where they live; there are deserts of broadband in all poor areas

 

 

Reviewing the Texas Universal Service Fund and reporting what, if any, changes should be made through a review of both the fund’s contributions and disbursements, as well as the impact of technology on the long-term stability of the Texas Universal Service Fund.

 

Thomas Gleeson, Public Utility Commission

  • USF account held outside state treasury; funded by taxable telecommunications receipts
  • Allows telecommunication providers to provide access in high-cost rural areas
  • State law does not allow USF to fund broadband or internet service
  • June 2020, staff recommended a raise in current assessment to increase USF funds; not happened so USF does not have enough funds
  • Short paid 190 million as of today
  • Chair Schwertner – How much do you need to raise the rate of assessment?
    • To pay back the 190 million in one month needs to rise to 110%; to pay within three years, up 4%
  • Chair Schwertner – How many providers participate in the fund?
    • 80
  • Chair Schwertner – Have any providers not been able to provide services?
    • No
  • Campbell – How many telecommunications companies contribute and receive support?
    • Assessment on all landline and cellphone consumers; provides support to 80 companies
  • Kolkhorst – What happens if these 80 providers go out of business?
    • The customers they serve would no longer have coverage
  • Kolkhorst – Do they have connection to internet towers?
    • They use fiber lines; there is one network for basic local and broadband services
    • We haven’t dealt with many wireless cellphone providers
  • Creighton – Does the PUC intend to address the shortfall with or without a court order?
    • We provide an update to commissioners; nothing on this issue has been docketed
  • Creighton – What do you intend to advise the commissioners?
    • I explain to them what they need to fulfil their obligations; I don’t know what they feel their obligations are
  • Creighton – So what will happen?
    • Without a court order, we will continue to increase the shortfall
  • MenĂ©ndez – Is there a definition for high cost or rural areas?
    • No, there is not a statutory definition
    • The fund was created in the mid 1980s; upon creation they designated what counties are high cost and rural
  • MenĂ©ndez – I would like a concrete definition
    • We tried leading into the last session, but there was no action from the commission
  • Chair Schwertner – Need to redefine who is eligible for USF
  • Nichols – In my opinion, statute says the USF fund must remain full, so it should
  • MenĂ©ndez – Areas that are no longer rural are taking away from the ones that are becoming increasingly so; need updated rural definition
    • All but 21 counties have a provider that gives high-cost support

 

Walt Baum, Texas Cable Association

  • USF established in late 1980s; paradigm no longer makes sense
  • Carriers today have multiple networks and services capable of providing broadband
  • Need for fundamental reform
  • Universal broadband is the future
  • Rural companies state one network provides both broadband and voice
  • Phone customers should no longer fund USF; legislature should allow broadband dollars to fund
  • Once customers have access to broadband, need to evaluate if voice needs to be supported
  • Currently voice pays for half of lines; broadband voice is just an app
  • Need to transition fund and limit unnecessary expenditures
  • PUC report flagged section 56025 saying if FCC eliminates support, the state must fill in the gap
  • Recommends reevaluating this flag
  • Need to only support high-cost rural areas; should impose density requirements

 

Rusty Moore, Big Bend Telephone Company & Texas Telephone Association

  • Located in Alpine, Texas; operating for 60 years
  • Only .25 customers per square mile
  • USF allows company to provide coverage
  • Uses fiber-based technologies
  • USF supports millions of Texans
  • FCC commended Texas rural industry leadership for providing extra coverage at the beginning of pandemic
  • USF similar to electricity users all paying a set cost
  • Need commission to adhere to obligations
  • MenĂ©ndez – Would creating an updated high cost and rural definition be helpful?
    • Yes, it is within their power

 

Ricky Martinez, Taylor Telecom

  • Non-profit member owned telephone cooperative
  • Serves 2,930 access lines across west central Texas in 9 rural counties
  • Ongoing maintenance and improvements key to providing reliable coverage
  • During pandemic, recognized by the FCC
  • 2010 SB 586 transparency reports are the lengthiest reports the PUC receives; primarily tools for overseeing rural and high-cost providers
  • Transparency demonstrates no misuse of USF funds by rural providers
  • Transparency requirements set to expire in 2023; should be continued
  • Broadband networks will tie into TUSF supported networks

 

Mike Hunsucker, Windstream

  • Operates in over half of Texas counties
  • Less than six subscribers per square mile
  • Significant reduction in USF contributions since 2018; 57% decrease
  • Wireless providers charge significantly less than landline; need to charge more
  • Recommends increasing USF assessment rate to 14%
  • Other states require wireless providers to charge the same amount as landline
  • Believes PUC already has ability to change regulations
  • Recommends improving USF contribution transparency

 

 

Monitoring the implementation of House Bill 2911, 87th Legislature, relating to next generation 9-1-1 service and the establishment of a next generation 9-1-1 service fund.

Kelli Merryweather, State Emergency Communications Commission

  • Calls answered by local call takers
  • 20 million 911 calls each year
  • 10% of 911 from landline; 90% from wireless phones
  • 77 911 entities throughout the state
  • Work with districts across the state on 911 related issues
  • New challenge is next generation 911; digital IP replacement of current system
  • Current system is not compatible with other first responder systems
  • Next gen needs to be implemented simultaneously throughout the state
  • 911 entities are planning or implementing next gen
  • CPA designated commission administrator of next generation 911 service fund
  • Commission provided direction at open meetings; received funds in April 2022
  • Approved allocations of funds; applications for funds due tomorrow
  • Recipients can request reimbursement on a monthly basis
  • Planning to spend all money by December 2024
  • 7 911 entities did not apply for funds; cannot maintain next gen on their own in the future
  • Future funding necessary for 911

 

Chip VanSteenberg, Montgomery County 911 District & Texas 911 Alliance

  • Pleased to be able to utilize funds for next gen
  • Districts on all points of development; larger districts leading the way on implementation
  • Next gen allows for more public and first responder safety
  • Challenge with short window to use funds; projects have a long pipeline
  • Requests extension of fund spending window
  • Most districts sign five-year service agreements; funds only allow for two years
  • Vendors charging monthly service fees for next gen 911
  • Need broadband; redundant sources important for reliability

 

 

Studying issues impacting the Texas electric grid, including weather preparedness and the natural gas supply chain and evaluating potential benefits of real-time transparency of the intrastate gas market with respect to the functions of ERCOT and the Texas Energy Reliability Council.

 

Christi Craddick, RCC

  • Proposed weatherization rule issued for public comment yesterday
  • Commission plans to adopt rule by end of summer; two years ahead of statutory deadline
  • Addressing extreme cold and heat; weatherizes to 2021 standards
  • Requires facilities to perform assessments, inspections, and tests; provide training; conduct emergency operations; and consider location, type, and specific equipment for facilities
  • Operators must comply by December 1, 2022; must submit report annually
  • Commission will conduct inspections for potential violations
  • Contains stiff penalties for violations; up to 1 million dollars per violation
  • RCC contracted with professional firms for expert advice, surveyed and visited with regulators in other states and Canada, gathered information on current facility practices, and published report on common weatherization practices
  • Notes critical gas lines and pipelines subject to rule
  • Adopted natural gas supply chain map April 29; intends to update twice a year
  • Map identifies critical infrastructure facilities
  • SB 3 established mapping committee to identify power for natural gas facilities; map includes 65,000 facilities
  • Map includes TDEM regions, roads, and visualization of weather watches and warnings; to be used during disasters for power delivery
  • Used preliminary version of map during winter storms
  • Market participants responsible for contracting for sufficient supply
  • MenĂ©ndez – How many operators received a critical infrastructure exemption?
    • 16; they were approved administratively because their gas does not go off lease
    • They have no relation to electric generation
  • Johnson – What market participants are you talking about?
    • All market participants
  • Johnson – Are they responsible in statute for contracting sufficient supply or is there a risk of blackout? Is that in statute?
    • You wrote the statute; we are under the impression that they can negotiate rates fairly
  • Johnson – It sounds like gas providers don’t have an obligation for sufficient supply?
    • There is a marketplace that makes the gas available for them
  • Johnson – So we need to make sure the marketplace allows them to do this?
    • I hope you do
  • Kolkhorst – Is there a way to increase natural gas transparency?
    • As an agency, we have transparency and post our rates; we have two AG opinions that limit what we can and cannot post
  • MenĂ©ndez – Is the reason for the weatherization and map to be able to provide reliable gas?
    • Yes
  • MenĂ©ndez – We need to make sure that gas can be provided at a reasonable price; there needs to be transparency in the cost
    • Natural gas is an international commodity; prices are centered around the global market
    • With a firm contract, prices would be more stable
  • MenĂ©ndez – In times of an emergency, natural gas prices should remain low
  • Johnson – What does it take to overcome the presumption that all contracts are reasonable?
    • There is a process to file an informal and formal complaint with the RCC
  • Johnson – Is that an effective process?
    • We’ve only had 39 complaints filed since its implementation in 2006
  • Johnson – What information ought to be available and what ought to be protected?
    • We post our rates; you can change the law if you would like
  • Johnson – Can you handle local deviations in gas prices?
    • Not necessarily

 

Thomas Gleeson, Public Utility Commission

  • Recommends expanding agencies on mapping committee; impassable roads issue in the past and including this information would be invaluable
  • PUC weatherization rule passed in 2021; required utility owners to take actions to prepare for the winner
  • Working on part two of weatherization rules; partnering with weatherization experts
  • After rule passed in August, ERCOT conducted visits to facilities; 95% passage rates for inspections
  • Will continue inspections before this winter
  • MenĂ©ndez – Could you explain the reliability unit commitment?
    • When ERCOT sees there may not be enough generation for reserves, they require units to commit into the market
  • MenĂ©ndez – Would the RCC play a role in a similar policy for natural gas?
    • Craddick – I’m not sure how that market would be set up
  • Nichols – What elements should be included in the transparency charge?
    • I would defer to ERCOT; I don’t have an opinion on what the gas industry should be sharing

 

John Arnold, Lock Lorde

  • Texas intrastate gas market is widely varied
  • In Texas market, bilateral contracts drive relationship between participants
  • Contracts provide an appropriate framework for fair partnerships
  • Natural gas generators important partner for providers
  • Growth in natural gas storage; new contracts with natural gas generators increasing
  • Opportunity for natural gas providers to shape their products to meet variability
  • Federally regulated interstate pipelines are monolithic
  • Intrastate pipelines are not rate regulated; no guaranteed return
  • Proposed requirements for interstate pipelines change the entire business model
  • Texas responds to market dynamics
  • Provides explanation of natural gas contracts
  • Chair Schwertner discusses whether natural gas contracts result in profiteering
  • Chair Schwertner – Are there confidentiality clauses in natural gas contracts?
    • Yes, in virtually all of them
  • Chair Schwertner – There is a law that prohibited confidentiality clauses?
    • That is on the upstream side, not the downstream
  • Chair Schwertner – Why shouldn’t it be on the downstream side as well?
    • The RCC and commenters wanted to keep it to increase competition

 

Paul Cyr, Self

  • Negotiated and managed natural gas storage for last forty years
  • Benefits in providing real-time transparency
  • Storage market not operating as efficiently as it should; FERC style regulation not needed or wanted
  • Intrastate pipelines and storage regulated by RCC; relies on market competition for competitive rates
  • Competition works well especially along Gulf coast; in north Texas there is a geographic monopoly
  • Natural gas providers should post rates, shippers, and other data for market transparency
  • Sharing of information across market allows shippers to make informed decisions
  • Recommends creation of capacity release market; firm shippers may resell capacity
  • Must ensure pipelines do not give preferential rates or access to affiliates
  • Recommends providing regulatory clarity to protect from monopoly of natural gas providers
  • Johnson – Do you think there needs to be enhanced regulations regarding preferential treatment?
    • Yes

 

Jim Cisarik, Texas Pipeline Association

  • Discussed general framework of pipeline network, Texas is integrated and flexible
  • Natural gas network and world class supply source is second to none in charge of delivery to end user
  • Continued industrial and population growth may impact capacity issues
  • Need physical pipeline capacity, have proper contracts in place to move production especially during times of high demand
  • Schwertner – your testimony is we need the physical infrastructure and the contracts?
    • Yes

Q&A

  • Johnson asked Arnold – investments made but there are places where market does not drive pipeline construction
    • Arnold – response to supply and demand vary, could be physical limitations
  • Johnson – asked about remark on if statutory authority appropriate, do you think there should be enhanced statutory protections
    • Arnold – structure contract to meet requirements, existing code of conduct at RRC was put in place due to study on competition and was intended to address abuses of affiliate relationships
    • Arnold – is it working would be better answered if it was invoked more often
  • Johnson – how would anyone know if someone was doing something wrong, choosing a particular affiliate?
    • Rates filed are public, and you know where other facilities are so if you are in the gas market it is your business to know competitors are located and customers are so you would know if something incorrect was occurring
    • Could work through informal and formal complaints
  • Johnson – would like to hear about adequacy about affiliate protections for preferential treatment/code of conduct?
    • Cyr – Don’t believe the currently available avenue is followed very often
  • Schwertner – Affiliate of natural gas entity cannot be complained against
    • Arnold – Agree
    • Arnold – Also says complaint against a marketer would be difficult, through the pipeline if conduct is through regulated pipeline and the affiliate
    • Arnold – Did not have an example he could provide
    • Arnold – In regard to informal complaints, RRC is receptive
  • Johnson – Cyr discussed the concept of bulletin board, would like to know from panel if there are parts that are more objectionable
    • Cisarik – Not sure what function you want the board to discover like price discovery is already published in many locations
    • Johnson – Clarifies about transportation rates being published, heard tariff is negotiated rate and don’t know if consumers are protected
    • Cisarik – There are maximum rates set
    • Johnson – There are rate hearings?
    • Arnold – A negotiated rate, it could be high or it might not
    • Johnson – Feels enforcement process is hollow because of this, how do we ensure the negotiated rate is in fact reasonable and people can see it
    • Arnold – Transportation rate is publicly filed on the RRC site, no real time flow but can get available capacity information
    • Johnson – Is capacity information on RRC site?
      • Arnold – No, but do need to contractually provide some information for customer
    • Johnson – how does availability of information undermine the dynamic?
      • Arnold – Competitive information
    • Arnold and Johnson continue to discuss what information is available vs should be available
    • Cyr – An EBB would be helpful for several things: design capacity, operational/available capacity, offer the ability to see what utilization rate the pipeline is running at, would also like to see an index of shippers or customers
  • Johnson – Does EBB have any relations to capacity released, acknowledges subject is highly contentious and asked testifier why it is contentious
    • Cyr – Could be seen on an EBB
    • Cyr – What happens today is unutilized capacity becomes available to pipeline and it is monetized
    • Johnson and Cyr discuss this process, Cyr argues this makes it more affordable
  • Schwertner – Have interest in making sure certain plants do come on, concern is how do we prove dynamics of plants to negotiate firm transport/fuel contracts with gas companies, what mechanisms could improve?
    • Cyr – In Texas with limited competitiveness the pipeline can charge what they want, without competition it’s difficult to come up with a particular solution
  • Cisarik – There will always be facilities in locations without 3-4 pipelines in them, the easiest way to help plants not served by a lot of pipelines is to figure out on electric side how to recoup cost
  • Schwertner – There is a difference between a LDC and an electric generation plan in an energy only market
    • Cisarik- Need to protect integrity of plants, in his mind they are the highest priorities and need to be able to contract and not be at risk
  • Cyr – Because market is so opaque don’t know if we have capacity or storage, why build infrastructure if we don’t know if it’s needed
  • Kolkhorst – Opaqueness in middlemen leads to complication, who does opaqueness benefit
    • Cyr – Thinks it benefits the pipeline
  • Johnson – Are you arguing it for it to be more economical for more pipelines
    • Cisarik – Make sure there is adequate capacity and then plants can go contract
  • Johnson – Questions Cisarik’s recommendations
    • Cisarik – If you can’t get gas there physically then plant will not run, provides example of power plant in middle of metropolitan area with people moving in and more demand so legacy pipeline needs help to serve everyone
    • Cisarik – Need to identify plants in this situation
  • Schwertner – Asked about peaker plants
  • Menendez – Clarifies a witness saying not enough bandwidth on the pipeline, would it help to come up with commitment on coldest or hottest days and would that provide an incentive
    • Cisarik – Paramount that generating industries identify areas that have issues, need to physically get gas there
    • Cisarik – Price in contracting, people should contract according to portfolio of need and should have it similar to LDC
  • Nichols – Early today was discussing gas mapping, with this should be able to identify the plants Cisarik is discussing, which entity should do this?
    • Pipelines need to have involvement
    • Generators need to be involved and respective pipelines that serve need to be involved
  • Schwertner – Asked about EBB or something like it?
    • Cyr – Have heard of others interested in same information
  • Kolkhorst – Would like written details on Cyr testimony, asked about comments on code of conduct
    • Cyr – Pipelines only provide a transportation or storage facility, in Texas Intrastate market there is not wall
    • Cyr – Could provide more than transport but commodity as well, if a utility sells a commodity believes it would be under authority of RRC
    • Arnold – Don’t have a wall unless you hear of law, and it’s taken seriously
  • Arnold – Capacity release is a federal construct, no regulatory feature that says you can’t structure capacity; don’t build pipelines on spec but rather evaluate firm commitments
  • Kolkhorst – Need to incentivize base load
  • Johnson – If capacity release could be an element, why is not?
    • Cyr – It doesn’t exist because pipelines have built in their revenue model the ability to access unused capacity in pipeline
    • Arnold – Who is on pipeline, they like to have final and meaningful say
    • Johnson – Why do they want a say in who owns transfer rights?
    • Arnold – It’s an asset that is built
    • Johnson – Pipelines do not build on 30-year capacity agreements
    • Cisarik – Buying from liquid areas, if cannot use the gas, re-sell it
  • Johnson – Heard that does not work well and the pipeline can control those points; are not done discussing these points
  • Chair Schwertner – Peaker plants or LDCs ratable?
    • No

Dean Foreman, American Petroleum Institute

  • Texas has led the nation in terms of production growth other the last decade due to the pipeline system
  • Do not want an intra state system that is upstream on Texas dependent
  • Is a regulatory prudency question, not necessarily a legislative one
  • Have all the tools available to mitigate risk, some utilities saying will not pay firm price
  • Question if there is enough demand to mitigate risk, they are telling investors they can compete
  • Role of gas has changed over time, market for investments has changed over time

 

Stan Brownell, L&G Argus

  • Probably only one in room gone through similar discussion before
  • Outlined all powerplants and characteristics on maps
  • Taught employees to trade natural gas
  • Information available for interstate pipelines that isn’t available for intrastate
  • Important to understand what’s happening on pipeline for risk assessment
  • Evaluated nominative, scheduling, and capacity of gas purchasing and storage; conducted report for PGM
  • Lack of communication and education exasperated Storm Yuri
  • PGM told power generators to buy excessive amounts of natural gas; overbought and drove up prices
  • Chair Schwertner – New formal commission allows for communication in Texas, so is this comparison applicable to Texas?
    • Commission only works if there is access to information; need to create capacity release

 

Todd Staples, Texas Oil & Gas Association

  • Power generation sector wants some input regulation but overall to be deregulated
  • Our system led to most robust natural gas system in U.S.; overall electric market successful too
  • Failures caused by market design system
  • Deregulation beneficial but need to look at what needs to be done
  • 90% of Texas pipelines are intrastate
  • There is no obligation to ensure “fair” gas prices
  • Texas continues to break production records for natural gas; less than 40% of produced gas was actually used in the state
  • Hedging, storage, alternative fuels all options to maintain Texas status
  • Gas sales not regulated but gas transportation is
  • Need transparency of power generation capacity
  • Cannot eliminate conditions that allow for sound economic decisions
  • Chair Schwertner – Would a gas desk at ERCOT help?
    • I would like to see it in writing; ERCOT does not procure gas
    • Another layer of bureaucracy in the middle of an emergency seems unhelpful
  • Johnson – This process should not be about generators vs pipelines or oil & gas vs electricity
  • Johnson – If we could ensure that proprietary information would not be shared, would the resistance to a gas desk dissipate?
    • We need a healthy robust power generation system; market participants are sharing data with one another
    • Gas desk is diverting attention away from more efficient plans
  • Johnson – Should suppliers give outage information to ERCOT?
    • No plant operates 365 days a year; there are always brief outages
    • When plants have outages, they communicate with customers
    • Current market conditions allow for increasing capacity; suppliers are reacting to market triggers
    • PUC reforms are causing hesitancy
  • Emphasizes need for market design reform rather than regulation
  • MenĂ©ndez – Situation important because of lives lost; embarrassing for state to not be allowed to consistently provide affordable energy
  • ERCOT and PUC decide if system will be competitive or regulated
  • MenĂ©ndez – Need special regulations for natural disasters

 

Mark Bell, Association of Electric Companies of Texas

  • Compressors and field equipment becoming more dependent on electricity
  • Oil and gas facilities considered critical electric customers
  • Dispatchable electric supply chain fueled by natural gas
  • 72% of dispatchable energy fueled by natural gas
  • 100% of electricity provides services to commercial and residential customers
  • Interdependency of supply between natural gas and electricity
  • Natural gas facilities considered critical but dispatchable facilities powered by natural gas are not
  • Lack of transparency and accountability in market, especially for dispatchable facilities
  • Need to ensure contracts can’t be canceled or waived; causes imbalance in supply chain
  • Accountability leads to resiliency
  • MenĂ©ndez – Need to ensure every day consumers don’t pay for someone else’s unfair profit

 

Public Testimony

Monitoring the implementation of House Bill 5 and House Bill 1505, 87th Legislature and discussing anticipated federal infrastructure funding dedicated to broadband initiatives.

David Maloney, CTIA

  • CTIA trade association for wireless industry
  • Texas has 3 million underserved individuals, mostly in rural
  • Technology inclusive approach could offer 5G; future proof broadband option
  • No one size fits all for broadband; should stay technology neutral and support 5G

 

Kenny Scudder, AARP

  • Federal funds bring opportunities for closing broadband digital divide
  • AARP commends BDO
  • Broadband expansion can be used for telehealth

 

Daniel Gibson, TSTCI

  • Association of small and rural providers; each serves less than 5,000 customers
  • PUC has all the authority they need to fix USF
  • PUC has sufficient information on companies
  • Companies made significant investments in rural Texas; PUC falling short on their end
  • Operating in deficits
  • MenĂ©ndez – Are some wired providers going out of business in August?
    • I am aware of the news stories; they are looking at suspending service
  • MenĂ©ndez – Do wireless customers have to pay less?
    • Yes
  • MenĂ©ndez – Do some customers rely on wired telephones?
    • Yes; there isn’t cellphone service everywhere
  • Johnson – Most of the infrastructure has been built right?
    • Yes, many landlines have been built

 

Studying issues impacting the Texas electric grid, including weather preparedness and the natural gas supply chain and evaluating potential benefits of real-time transparency of the intrastate gas market with respect to the functions of ERCOT and the Texas Energy Reliability Council.

Tim Morstad, AARP

  • Electric customers across state feeling the pinch of higher prices for necessary services
  • Intersection of electricity and gas
  • Ongoing daily struggle and need for keeping Texans’ bills affordable
  • Half a million Texans completely reliant on social security
  • Need more transparency when PUC or ERCOT adds charges to bills