Discussion about three buckets of funds: Broadband Infrastructure Fund (BIF) (1.5 billion), federal funds from the "Bringing Online Opportunities to Texas" funds (BOOT funds) (500 million) needing to be expended by Dec 31 next year, and Brodband Equity Acess and Deployment (BEAD) funds (3.3 billion).
Complexity in dealing with multiple federal partners like the US Treasury for BOOT fund and National Telecommunications Infrastructure Agency for BEAD funds.
Importance of the 1.5 billion BIF fund for greater flexibility to match funds and expedite disbursement for the second round of boot funding.
Emphasis on the 24 most critical counties in Texas with tight timelines to expend BOOT funding by December 31 next year.
Challenges with mismatching state and federal statutes, with efforts in the last session to align them.
Decision to match some BOOT funding with BIF funding to maximize funding distribution in critical counties and manage the entire state as BEAD funding becomes available next year.
Addressing the growing pains in working with federal partners and the need for flexibility given Texas's unique size and needs.
Comptroller Glenn Hegar confirmed his neutral stance and the discussion was handed over to Gregory Conte.
Woody Rickerson from ERCOT, testifying neutrally, explained that ERCOT's role is to review resiliency plans from a transmission perspective and provide coordination if necessary.
Mark Bell, President of AECT, testified neutrally.
Electric utilities in Texas are facing unprecedented challenges due to rapid growth and extreme weather events.
HB2555, the Texas Resiliency Act, was introduced to help utilities develop and implement long-term resiliency plans.
The Act was modeled after similar legislation in Florida and allows for investments in projects to improve grid resiliency.
These projects include strengthening distribution facilities, undergrounding lines, lightning and flood mitigation, cybersecurity, vegetation management, and wildlife response.
HB2555 aims to reduce costs and improve long-term infrastructure, benefiting consumers by potentially avoiding repetitive storm recovery costs.
Utilities submit multi-year resiliency plans to the PUC for review and approval.
Discussion on the transmission portion of the bill, which was removed in the final version, and potential utility in revisiting it later.
Emphasis on the importance of the resiliency measures and ongoing support from PUC in reviewing submitted plans.
3 - HB5174, relating to the establishment and administration of the Texas Semiconductor Innovation Consortium
Adriana Cruz, Executive Director of the Texas Economic Development and Tourism Office, testifying neutrally.
Larry Smith, Vice Chair of the Texas Semiconductor Innovation Consortium Executive Committee, accompanied Cruz.
HB5174, signed into law by Governor Abbott in June 2023, established the Semiconductor Innovation Consortium, its executive committee, and the Texas Semiconductor Innovation Fund.
A new division, the Texas Chip's office within the Economic Development and Tourism Office, supports these entities.
SB30 appropriated $698.3 million for the purposes defined in the act.
The consortium is governed by a nine-member executive committee appointed by various state leaders and educational system chancellors.
The consortium consists of designees from 19 Texas higher education institutions.
The executive committee has met eight times since March 19 and established three subcommittees: scoring methodology for the Texas Semiconductor Innovation Fund, strategic planning, and executive director search.
A statement of mission, goals, and objectives was adopted as the framework for the strategic plan.
The Texas Semiconductor Innovation Fund provides matching funds to higher education institutions for semiconductor projects and awards grants to businesses for economic development.
29 applications for the Texas Semiconductor Innovation Fund were received and are under review.
The executive committee recommended five grant applications totaling approximately $115.4 million, with one grant already approved and proceeding to contracting.
The consortium is monitoring upcoming federal opportunities beneficial to Texas.
Glenn Hamer, President and CEO of Texas Association of Business, neutral on HB5174
HB5174 complements, supplements, and covers gaps in federal legislation, specifically the federal Chips Act.
Texas Legislature and Governor Abbott have aggressively leveraged federal funds for semiconductor industry support.
Acknowledgement of leadership by Chairman Bonnan and Senator Huffman in advancing HB5174.
Semiconductors' crucial role in maintaining Texas' leadership in investment and exports.
Significant investments in Texas by companies like Samsung and Texas Instruments.
Texas currently ranks number one in semiconductor exports.
Research and advancements in semiconductor technology happening in Texas universities (UT Austin, Texas A&M).
Commendation for the legislature's holistic approach in legislation related to higher education (e.g., Jedi Act, HB8).
Commendation for Governor Abbott and his team's efforts in establishing international relationships to bolster Texas' semiconductor industry.
Questions raised by Representative Turner about federal investments in Texas facilities from the Chips and Science Act.
Response by Adriana Cruz detailing federal investments: $6 billion for Samsung in Taylor, $400 million for Global Wafers in Sherman, $840 million DARPA grant for UT Texas Institute of Electronics.
Confirmation that these events occurred within the past year.
Transition to the utility preparedness section of the meeting, involving different panelists and a structured Q&A format.
4 - SB1699, relating to electricity service in the ERCOT power region, including the participation of aggregated distributed energy resources in the ERCOT market
Sam Chang, Director and Associate General Counsel at CenterPoint Energy, testified neutrally.
CenterPoint Energy's involvement in Aggregate Distributed Energy Resources (ADER) was discussed.
ADER is a virtual aggregation of small, consumer-owned distributed energy resources.
ADER provides an additional solution along with dispatchable generation, transmission, energy efficiency, and demand side management.
It allows customers to utilize their assets fully and supply energy to the grid during critical times.
CenterPoint chaired the PUC’s ADER task force, contributing to the design and implementation of a pilot program for ADER participation in the ERCOT market.
Currently, there are two ADERs participating in ERCOT, with about 13 MW on the energy side and 12 MW on non-responsive reserve and contingency reserve.
Eight ADERs, representing approximately 4.8 MW, are in the queue to participate in the ERCOT wholesale market.
CenterPoint is allocating part of its R&D budget to facilitate additional involvement in distributed energy resources and study their impact on the distribution system.
Since 2016, CenterPoint has integrated about 46,000 distributed energy resources, representing 700 MW.
In 2016, the number was about 2200 distributed energy resources, increasing to about 48,000 by the end of 2023.
Cyrus Reed, legislative and conservation director of Lone Star Chapter, Sierra Club, expressed neutrality on SB1699 but noted prior support for the bill.
Clarified that ADERs working with retail electric providers are not considered power generation companies, allowing small consumers to engage in the energy market more easily.
SB1699 allows TDUs and ERCOT to dedicate up to 10% of their demand response budget to energy efficiency programs.
Emphasized the importance of smart thermostat programs for managing weather-sensitive loads in both winter and summer, potentially reducing the need for additional power generation.
Stressed the importance of setting goals for customers with smart thermostats and appliances.
Reed mentioned ongoing rulemaking processes and expressed hope for positive outcomes.
Praised efforts by CenterPoint and Oncor for their initiatives in energy efficiency and smart thermostat programs.
Noted that AAP and TNMP have yet to initiate residential smart thermostat programs, hoping for future participation to help reduce customer bills.
Concluded with thanks to committee members and witnesses, and the adjournment of the meeting.
5 - SB2627, relating to funding mechanisms to support the construction, maintenance, modernization, and operation of electric generating facilities
Highlighted the need for rulemaking on programs outside of ERCOT for resilience, transmission, and generation, as well as the backup power packages for critical facilities.
Mentioned the importance of transparency on the PUC’s website regarding loan application status and basic information, as it involves taxpayer funds.
Hector Rivero, President of the Texas Chemistry Council, testified neutrally on SB2627.
Rivero mentions the success of the Texas Energy Fund in attracting new dispatchable generation with over 70 applications proposing 38,000 MW of new dispatchable power.
Emphasis on the importance of geographic diversity for projects to meet state needs, particularly focusing on areas expecting demand growth and transmission needs.
Commends the legislature for leadership in creating the Texas Energy Fund to enhance ERCOT grid reliability.
Dean Foreman, Chief Economist of TXOGA, testified neutrally on SB2627.
Foreman supports SB2627 and appreciates the PUC's work on the Texas Energy Fund.
Highlights the need for timely distribution of funds with a focus on geographic diversity and targeting areas in need of generation.
Emphasizes achieving balanced energy availability and grid reliability based on expected unserved energy (EUE) and analysis by ERCOT and the independent market monitor.
Foreman mentions the goal to avoid overly constraining ERCOT's operational model and escalating costs.
TXOGA is committed to ensuring cost-effective and reliable electricity for Texans.
6 - HB1500, relating to the continuation and functions of the Public Utility Commission of Texas and the Office of Public Utility Counsel, and the functions of the independent organization certified for the ERCOT power region; increasing an administrative penalty
Executive Director Connie Corona, PUCT, testified neutrally on HB1500
HB1500 is the agency sunset bill addressing recent sunset reviews and regulation of electric, water, and telecom services.
Over a dozen projects open to implement various sections of the bill.
Key implementation efforts from operational and governance standpoint include strengthened communications and a new commissioner training program.
ERCOT protocol approval process adopted for PCM.
Scoping for cost benefit studies by ERCOT and independent market monitor nearly complete, expected by December.
Stakeholder input taken in writing and verbally at a workshop.
Two key rulemakings completed in the past six months: transmission interconnection allowance rule and changes to standards/processes/penalties for voluntary mitigation plans for wholesale market participants.
Numerous studies and reports required by the bill are underway, many in partnership with ERCOT.
Development of biennial agency report, including legislative recommendations, to be delivered by January 2025.
9 out of 15 sunset management actions fully implemented, remaining actions in progress.
Woody Rickerson, ERCOT, testified neutrally on HB1500.
HB1500 contains several provisions related to the PUC and ERCOT.
ERCOT is supporting the PUC and the PCM.
HB1500 includes dispatchable reliability reserve service (DRRS).
Current protocol revisions focus only on generation resources, excluding batteries and controllable load resources.
Changes were made to board policy and governance provisions.
ERCOT is aiding the PUC with several reports, including biennial agency report, dispatchable and non-dispatchable generation report, and consolidated electric industry report.
HB1500 mandates posting reasons for generation outages, which have been posted.
There is a provision for temporary electric energy facilities (TEF) and mobile generators.
ERCOT is participating in PUC projects to define significant power outages.
Hector Rivero, president of the Texas Chemistry Council, testified neutrally on House Bill 1500.
The Texas Chemistry Council represents the chemical industry in Texas, which includes around 200 manufacturing facilities and about 500,000 jobs.
Rivero emphasized the importance of grid reliability and competitive electricity costs for the chemical industry in Texas.
He praised the legislature for consumer protections in HB1500 that guard against high costs from capacity market designs like the PCM.
Highlighted that ancillary services, such as dispatchable reliability reserve services, can meet grid demands without customer costs for unused generation.
Noted that since Winter Storm Uri, there have been no capacity issues with the grid, though there have been distribution outages and conservation notices.
ERCOT has effectively managed the grid during recent extreme weather events.
Generation Interconnection Allowance Rulemaking Completed earlier this year.
Aim was to limit ratepayer burden for costly interconnection of generation facilities. APA appreciates the non-biased, collaborative review process.
Legislation intended to include battery participation. Concerns raised about ERCOT's current development excluding battery storage. APA seeks a committed timeline for battery inclusion.
Views PCM as unrealistic and projects a $21 billion annual market cost. APA emphasizes the need for the $1 billion annual net cost cap set by legislation.
APA notes existing market capabilities are already providing significant firming, citing co-location of solar developments with battery storage.
APA calls for non-discriminatory policies to leverage renewable resources, battery storage, and thermal power. Emphasizes investments in transmission for reliability and affordability.
Jason Wells, CEO of CenterPoint Energy, testified neutrally regarding the response and aftermath of Hurricane Beryl.
Acknowledged failure to meet customer expectations and apologized.
Outlined restoration efforts: 1 million customers' power restored in 48 hours, 98% restored in nine days.
Described extensive repair work: over 3,000 electric poles replaced, 8,500 circuit miles walked, 35,000+ trees trimmed or removed.
Coordinated a workforce of 15,000 across 22 sites; one site shutdown due to threats.
Committed to improving standards and response times.
Expressed gratitude to crews, contractors, and first responders involved in restoration.
Outlined future actions across three pillars: resiliency, communications, and local partnerships.
Resiliency efforts: doubled workforce for vegetation management, targeting high-risk areas, using composite poles instead of wood, and increasing crew buffer.
Communication improvements: launching a cloud-based outage tracker, overhauling emergency communications, and providing daily public briefings.
Strengthening local partnerships: hiring a new emergency operations leader, improving emergency preparedness year-round, and developing closer community partnerships.
Committed to implementing over 40 actions to improve response efforts.
Working on determining the best generation solutions for customers.
Kerry Kelton, CEO of MidSouth Electric Cooperative, testified neutrally.
MidSouth Electric Cooperative is a not-for-profit, member-owned cooperative serving 40,000 electric meters, 15,000 fiber Internet subscribers, and 8,000 water customers.
Hurricane Beryl caused extensive damage in their service area; more than 75% of meters were without power.
The emergency work plan was followed and services were restored by June 11.
Kelton highlighted the cooperative's high construction standards, year-round maintenance program, and technology-based outage management system.
Annual employee preparation and emergency drills were conducted, which aided in their response.
Business partners and contractors were contacted in advance, and a supply of materials was stockpiled for emergencies.
Inter-cooperative assistance was provided by the Heart of Texas Electric Cooperative and Bartlett Electric Cooperative.
Chairman mentioned the importance of communication and solutions for all utilities, focusing on the impact on the public.
Vice Chair Hernandez emphasized the need for unity and the significance of power as a necessity, referencing specific tragic losses due to power outages.
CenterPoint's actions during emergencies were scrutinized, highlighting perceived prioritization of profits over people, particularly in terms of vegetation management and outage communication.
CenterPoint was questioned about their expenditure on vegetation management compared to other utilities, with an acknowledgement that their efforts were insufficient.
CenterPoint stated they increased their vegetation management budget significantly and committed to further actions.
Discussion also covered internal workforce management vs. contracting out for emergency response.
CenterPoint has historically not reduced the number of internal line skills, including linemen, vegetation management professionals, and damage assessors.
Upon joining the company four years ago, Jason Wells identified an immediate need for investment in the electric system, particularly in Houston.
CenterPoint sold businesses in other states to fund focused investments in Houston Electric, doubling its capital expenditures.
Initially utilized outside contractors due to the three-year training period for in-house line professionals.
Jason Wells confirmed plans to bring more frontline skills in-house, noting that working with contractors was a necessity over three years ago to initiate system investments quickly.
Discussions on temporary generation costs revealed leasing was more expensive than purchasing, which would have been less than half the cost.
60% of vegetation cleared following recent storms was outside of CenterPoint's right of way, with 70% of that being full trees; property owner consent is required for such clearances.
Vegetation management is vital, including addressing high-risk trees, but it requires homeowner cooperation.
Post-storm restoration efforts showed significant percentage of outages due to trees outside right of way; future plans involve improving system sectionalization and adding substations and feeder lines for better power rerouting.
Communication was emphasized, particularly during outages, to help residents make informed decisions.
Issued a commitment to clear 350 miles of high-risk areas by end of August and 2000 miles by end of the year.
Historical vegetation management spend and operational challenges were reviewed, noting budget considerations by the PUC.
Discussed the importance of investing in vegetation management, sectionalization, and bettering communication to improve service and response times.
Jason Wells discussed the unique factors of their system, including significant industrial load and the Texas Medical Center in Houston, limiting their ability to shed load and roll power for residential customers.
During Winter Storm Uri, CenterPoint was asked to immediately shed 5000 MW, exceeding their system's design capacity of 3000 MW, causing residential customers to go without power for several days.
A mitigation strategy to shed 500 MW in future events would help manage the additional 2000 MW load shed requested during Winter Storm Uri, allowing them to roll power to customers every 4 hours.
CenterPoint entered into a lease agreement with Lifecycle Power for mobile dual fuel turbine generators, adding up to 500 MW capacity to support the grid during emergencies.
The equipment could provide electricity to hundreds of thousands of homes during extreme emergency events, like hurricanes and tornadoes, but was not effective in all scenarios.
Increased profits and storm-related cost recovery: CenterPoint sought approval from the PUC of Texas to issue bonds to recover $1.5-$1.7 billion in storm-related costs, potentially raising residential customers' rates by 2% over the next 15 years.
CenterPoint is on negative outlook with credit rating agencies due to storm costs, emphasizing the need for recovering expenses to continue infrastructure investments.
Differentiation between maintenance operations (M&O) and capital expenditures: CenterPoint can profit from capital expenditures but not M&O expenses.
There was a significant discussion about pole replacement and vegetation management programs, revealing a cycle replacing about 100,000 poles annually and spending more than the approved budget on vegetation management.
Utilization of mobile generation units: Small and medium units were fully utilized during the storm, whereas large units were not due to distribution line issues.
Coordination and communication issues were highlighted, especially with inaccurate outage trackers and challenges in deploying resources promptly after the storm.
A commitment to better communication and action plans to address deficiencies in their vegetation management program was expressed.
Discussed ERCOT's preparation and response to Hurricane Beryl.
Stated that there was adequate generation to meet system demands during the storm.
The storm primarily affected local transmission and distribution, not the overall ERCOT grid.
Highlighted ERCOT’s system operator training for severe weather, annual drills, and their frequent communication with market participants about potential hurricanes.
Issued operating condition notices and made adjustments to outage coordination leading up to Hurricane Beryl.