by Wendell Bell, Grid Monitor
Posted 05/28/2021

With the May 31st end of the legislative session only days away, Texas legislators have yet to agree on legislation that would address widespread utility failures during Winter Storm Uri.  Four of the most prominent bills are heading to conference committees to work out differences between House and Senate versions, facing a deadline of midnight, May 29th to produce results. These include HB 4492 that would allow (ERCOT) and certain market participants to use securitized financing to spread payment of unpaid invoices over many years; SB 3, the Senate’s omnibus utility reform bill; SB 2 that would modify eligibility requirements of certain board members of the Electric Reliability Council of Texas (ERCOT); and SB 2154 that would restructure the Public Utility Commission (PUC).

HB 4492 by Rep. Chris Paddie and sponsored by Sen. Kelly Hancock is one of the key bills dealing with the financial fallout from the market disruption in ERCOT.   The Senate version voted out late Wednesday night not only includes significant changes regarding the administration of the securitized loan program, but it would also add provisions targeting the 32-hour period toward the end of the winter event when regulators held wholesale energy prices at the highest allowable price of $9,000 per megawatt-hour. 

The regulatory intervention has been characterized by some as a “pricing error” while others say it was necessary to prevent the grid from collapsing during unstable conditions.  In March, the Senate introduced and passed in one day a bill that would require the PUC to “correct” prices during that period, but the House did not act on the proposal.  In accepting the floor amendment on this topic, Sen. Kelly Hancock said it would “continue the conversation” as the bill heads to conference committee.  Sen. Hancock was one of only three Senators that voted against the repricing bill, SB 2142.

 The Senate version of HB 4492 does not include the House proposal to create Texas Electric Securitization Corporation which would issue bonds to fund the program.  Instead, the Senate version would shift funds from the state’s Economic Stabilization Fund (ESF) to the Comptroller’s Office which would manage the loan program. 

SB 3 by Sen. Charles Schwertner and House sponsor Rep. Chris Paddie contains many topics including weatherization of electric and natural gas facilities, emergency preparedness, utility supply chain mapping, and coordination of activities among key state agencies including the PUC, ERCOT, Railroad Commission, the Texas Division of Emergency Management (TDEM), and the Texas Commission on Environmental Quality (TCEQ).  In addition, the bill would address reliability concerns including treatment of dispatchable generation resources, namely wind and solar.  On May 27th, the Senate refused to concur in House amendments and requested a conference committee.

SB 2 by Sen. Kelly Hancock and House Sponsor Rep. Chris Paddie would make several changes to the eligibility requirements and selection process for the five members of the sixteen members of the ERCOT board of directors who are unaffiliated with any market segment.  Currently, these five are selected by the other directors (who represent various market segments), subject to PUC approval. The Senate version of the bill calls for the unaffiliated directors and as well as the ERCOT CEO to be appointed by the governor with the advice and consent of the Senate.   The House version would require the unaffiliated directors, still selected by the other board members, to be approved by a majority of the governor, the lieutenant governor, and the speaker of the house of representatives.  On May 27th, the Senate rejected the House amendments and named its conferees.   House conferees are expected to be named on May 28th.

SB 2154 by Sen. Schwertner and sponsored by Rep. Paddie would restructure the composition of the PUC.   Under current law, candidates for appointment must be “well-informed and qualified in the field of public utilities and utility regulation.”  The bill would retain those qualifications for two of the five commissioners while the other three must have five years of experience “in the administration of business or government” or as a practicing attorney, certified public accountant, or professional engineer.  The House added amendments to require appointments “to reflect the diverse geographic regions and population groups of this state” and that at least one commissioner must be from a rural county with a population of less than 150,000.  In addition, the House version includes a “revolving door” provision that would prohibit a commissioner from registering as a lobbyist for two years after leaving the agency.  The Senate refused to concur with House amendments on May 25th and a conference committee has been appointed.  

May 30th is the deadline for adopting conference committee reports, which must be distributed 24 hours before becoming eligible for consideration.