Meeting Summary - 04/03/2025 Senate Business & Commerce

▶️1 - SB231 King

• The committee substitute for SB231 will reflect the removal of the disgorgement provisions.
• SB231 will not proceed unless agreed upon by the committee and guests from the Houston delegation.
• The chairman has requested CenterPoint to explain the agreement.
• The PUC will discuss the enforceability of the agreement.
• Mr. Ryan from CenterPoint is scheduled to give prepared remarks.

▶️Jason Ryan, CenterPoint, SB231 Public Testimony

• Jason Ryan, Executive VP at CenterPoint Energy, addresses the Business and Commerce Committee regarding actions taken for 15 large emergency generators.
• Acknowledged that CenterPoint should have communicated better about costs and limitations of generators since 2021.
• Apologized to Senator King and his family for unnecessary stress caused during legislation efforts.
• Proposed donating the 15 large generators to ERCOT for two years to resolve potential outage issues in San Antonio.
• CenterPoint will absorb $180 million in costs and will not charge ERCOT or Houston area customers.
• Plan includes a base rate reduction for customers, effective by the end of the month.
• Agreeing to forgo costs related to Hurricane Beryl that would have otherwise been passed to customers.
• Filing an application with the PUC to remove costs from rates moving forward, reducing average residential rates by about $2 a month.
• Combined efforts aim to make customers whole for the generator costs, providing a net benefit of $120 to average customers.
• Appreciated collaboration with ERCOT and CPS Energy to address the issue and committed to ongoing communication with related offices.

▶️Senator Bettencourt to Jason Ryan, SB231 - Ratepayer Relief and Accountability

• Acknowledgment of past issues with ratepayer policies and efforts to improve accountability and transparency.
• Discussion on ensuring all customer classes, including residential, small commercial, large commercial, and even those paying for street lamps, are made whole from charges related to costs of 15 large generators.
• Mention of benefits and net gains for customer classes, highlighting a small commercial segment with a net benefit over costs.
• Emphasis on transparency to the public, ensuring charges are not passed to consumers directly or indirectly.
• Commitment to clear communication and accountability in filings with the PUC.
• Statements on infrastructure improvements and preparation against potential future storms, ensuring better communication and quicker restoration times.
• Reassurance of commitment to maintaining a resilient coastal grid and being more customer-focused.
• Reflection on past criticisms and efforts for improvement moving forward.

▶️Senator Alvarado to Jason Ryan, SB231 - Increasing Trust, Reliability, and Workforce

• Concerns about constituents' trust and confidence in ERCOT's reliability, particularly after recent unexpected weather events like the derecho and Hurricane Beryl.
• Discussion about 15 generators and the workforce changes involving people responsible for past decisions.
• Jason Ryan highlighted frustrations among customers regarding frequent outages, which were intensified after Hurricane Beryl.
• Introduction of Greater Houston Resilience Initiative, including increased tree trimming efforts to improve grid reliability.
• Efforts to install more resilient poles and infrastructure as visible demonstration of ERCOT's improvement work.
• Segmentation of the grid to prevent widespread outages, analogous to newer Christmas lights technology.
• Successful restoration of service to a million customers within first 48 hours during Hurricane Beryl, illustrating ongoing improvements.
• Concerns about the scaled-back number of in-house linemen and commitment to increase internal resources with necessary skills.
• Confirmation of hiring a new meteorologist to better anticipate and respond to weather-related challenges.

▶️Senator Cook to Jason Ryan, SB231 - Communication Plan and Source of Ratepayer Benefits

• ERCOT identified San Antonio as a critical area due to retiring generation, potentially overloading transmission lines, leading to new transmission line projects.
• ERCOT is confident the San Antonio generation issue will be addressed in approximately two years.
• Donations of generators will benefit Houston ratepayers, avoiding potential problems affecting the entire ERCOT area.
• Communication with constituents includes town halls, commercials, and ads in newspapers.
• ERCOT recognizes previous communication failures and has a new focus on improving communication with customers.
• Daily team meetings focus on emergency response, infrastructure improvements, and communication strategies.
• The company is absorbing costs from the storm following hurricane Beryl without cutting services or linemen.
• The company is not seeking to recover storm-related labor costs, impacting their profits.
• There is a commitment to prioritize people over company profits, ensuring customer-facing services are maintained.

▶️Senator Middleton to Jason Ryan, SB231 - Delay of Upgrades

• Senator Middleton expressed satisfaction about ratepayers receiving refunds for useless backup generators in Galveston County.
• Highlighted concerns over delayed deployment of reclosers and trip savers, which could have mitigated power outages.
• Noted the higher costs for implementing these technologies now as opposed to 20 years ago, which is now being transferred to ratepayers.
• Expressed concern about ratepayers bearing the cost of delayed infrastructure upgrades necessary before the next hurricane season.
• Criticized past management decisions for not adopting proven technologies that could have kept more meters online during outages, putting the financial burden on ratepayers now.
• Called for further measures to protect ratepayers from cost increases due to management oversight.

▶️Senator Creighton to Jason Ryan, SB231 - Generators in San Antonio and 2 Year Time Frame

• Senator Creighton asked for an update on asset usage and referenced San Antonio.
• Discussion on ERCOT's need for generation in San Antonio and issuing an RFP for solutions, which was unsuccessful.
• Fifteen large units have been identified to address the generation need in San Antonio, where CPS Energy has retiring units.
• The plan involves collaboration with ERCOT leadership, PUC, and CPS to place units in San Antonio for approximately two years.
• After two years, it is undetermined where these units will go, but they will not return to customer rates.
• There was a suggestion that the plan should have been presented to the Hurricane Preparedness Committee.
• Commentary on the necessity of regaining trust with the legislature, ratepayers, and elected officials in Texas.

▶️Senator King SB231 - Disgorgement Provision

• The bill includes a disgorgement provision for $997 million, aiming to refund $480 million already collected by CenterPoint.
• Customers will be reimbursed $480 million, with future charges of $997 million to be absorbed by shareholders.
• Clarification that leased generators must be mobile, have a maximum capacity of 5 megawatts, and be operational within 3 hours during power outages.
• A competitive bidding process is required for leasing facilities, with necessary PUC approval.
• TDUs leasing facilities without competitive bidding must ensure capacity doesn't exceed requirements to restore services during outages.
• Leased facilities must be movable within 12 hours and operational in 3 hours from deployment.
• The proposal aligns with PUC rule 25.56, effective January 8, 2025.
• Agreement in place makes CenterPoint customers whole and relieves them of future lease charges.

▶️Senator King to Connie Corona, PUC, SB231 - Enforceability of Disgorgement Provision

• Senator King expressed appreciation for staff assistance over the past six to eight months in understanding the issues and potential fixes.
• The enforceability of the agreement presented by Mr. Ryan was questioned, particularly concerning potential future charges by CenterPoint.
• It's confirmed that the agreement and contested case application are enforceable by the PUC, with thorough review by rate regulation experts and attorneys before a ruling.
• In case of future issues, rate payers can use several avenues to file complaints, such as the PUC's office of public engagement and consumer protection division.
• The process for community members to understand billing impacts and resolve complaints involves direct assistance from investigators.
• Public testimony was opened, with John Elder and Sandra Haverlah called to testify.

▶️Sandrah Haverlah, TCA, SB231 Public Testimony

• Sandy Haverlah, president of Texas Consumer Association, expressed concern about the late notification of the substitute details for the hearing.
• The Texas Consumer Association filed a complaint to Senator Bettencourt under the discussed process, still pending since September of last year.
• The complaint had over 40 members agreeing to participate, concerning issues that were seemingly negotiated out in the current deal.
• TCA plans to monitor the PUC filings and may keep their complaint pending to review outcomes.
• Concerns were raised regarding policies allowing TDUs to lease generators for profit and questioned whether these should continue under current state policies.
• Suggested that a statewide program might be better managed by another entity such as TDEM, for more equitable distribution to residents.

▶️John Elder, Tx Reliability Coalition, SB231 Public Testimony

• John Elder represents the Texas Reliability Coalition, a nonprofit focused on consumer advocacy before regulators, officials, and utilities.
• The Coalition aims to educate stakeholders on cost-effective energy solutions to strengthen the grid without burdening taxpayers.
• Addressed the importance of utility scale microgrids in improving grid resiliency and reliability under SB231.
• Utility scale microgrids protect critical water facilities and infrastructure, can be implemented quickly in 12 to 16 months, and leverage public-private partnerships.
• These microgrids use utility-owned infrastructure for community-wide reliability and frequency support during non-emergency periods.
• They serve areas exceeding 10 megawatts and provide stationary, permanent generation solutions.
• More than 30 municipal utility districts and the city of Houston have shown interest in utility scale microgrids.
• No questions were asked by panel members, and public testimony on SB231 was closed with the bill left pending.

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▶️7 - SB1003 Blanco

• SB1003 applies solely to the El Paso Electric Service territory, an investor-owned utility outside of the ERCOT region, part of the Western Electricity Coordinating Council.
• Current law allows El Paso Electric to offer net metering to compensate distributed renewable generation (DRG) customers.
• The bill proposes giving El Paso Electric the flexibility to adopt alternative DRG compensation methods when approved by the PUC.
• Any proposed alternative compensation methods must undergo contested regulatory proceedings at the PUC, involving all stakeholders.
• The flexibility aims to address the increasing amount and new types of DRG, ensuring system reliability, and fair cost allocation.
• Stakeholders are working on a committee substitute.
• A resource witness from the PUC is available for technical questions.
• Public testimony is open with five individuals scheduled: Daniel Perez from El Paso Electric, Ms. White from Public Citizen, Cyrus Reed, Patrice Parsons from Texas Solar Energy Society, and Ms. Corona from the PUC as a resource witness.

▶️Daniel Perez, El Paso Electric, SB1003 Public Testimony

• Daniel Perez from El Paso Electric addressed the council.
• The bill mentioned only applies to El Paso Electric's service area.
• If passed, the bill requires no immediate action but grants flexibility.
• Statute has been in place since 2011 and needs updating due to changes in technology.
• Previously had a few hundred customers with rooftop solar; now around 10% of Texas customers have such systems.
• Current customer base includes over 35,000 systems with rooftop solar, some paired with battery storage or EVs used as storage.
• There is a need for flexibility to accommodate emerging technologies like geothermal and modular nuclear.
• Flexibility is necessary to prevent disproportionate system costs for non-distributed generation customers.

▶️Cyrus Reed, Sierra Club, SB1003 Public Testimony

• Cyrus Reed from the Sierra Club signed up neutrally on SB1003.
• The Sierra Club supports El Paso Electric exploring alternatives with new technologies like storage and EVs.
• There is a concern about protecting current net metering participants and ensuring fair treatment for future rate payers with on-site solar.
• A productive meeting took place about potentially adding study language to evaluate fair value before implementing new rates.
• The Sierra Club wants guardrails in place for future arrangements to protect their members with solar installations.
• Public testimony on SB1003 was closed and it remains pending.

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▶️11 - SB1963 Creighton

• SB1963 builds upon the 2021 House Bill, HB1510,  allowing utilities within ERCOT to securitize system restoration costs.
• The bill enables the use of the Texas Electric Utility System Restoration Corporation by these utilities.
• It lowers the securitization threshold from $100 million to $50 million.
• The bill consolidates cost determination and financing order into one proceeding.
• Permits securitization of estimated system restoration costs.
• Statutory protections for ratepayers remain intact, ensuring lower cost financing and tangible benefits.
• Requires true-up and reconciliation of estimated amounts securitized.

▶️Mark Bell, AECT, SB1963 Public Testimony

• Mark Bell testified on behalf of the Association of Electric Companies of Texas (AECT) in support of SB1963.
• SB1963 aims to expand an existing PUC program to allow ERCOT utilities access to a storm recovery cost mechanism.
• The program benefits include consumer savings through lower interest rates and improved financial health for utilities by moving unexpected costs from their balance sheets.
• The PUC would oversee the program to ensure it benefits consumers.
• Public testimony on SB1963 was closed and the bill was left pending.