The PUC is the state's economic regulator for private water, wastewater, telecommunications, and electric utilities.
The PUC also has primary authority over the Electric Reliability Council of Texas (ERCOT), which runs the majority of the Texas electric grid.
The PUC's mission is to protect customers, foster competition, and promote high-quality infrastructure.
Activities since the last legislative session are aligned with the PUC's mission.
▶️Connie Corona, PUC - Overview of Key Activities Since Last Session
Creation of an interconnection allowance to cap consumer costs for connecting new generation to the grid.
Registration requirement for large crypto miners (SB1929) to give PUC and ERCOT visibility into operations.
12 crypto mining companies registered, representing 21 facilities expected to consume 4,000 MW by end of the year.
Utilities authorized to file resiliency plans (HB2555) with PUC, 2 approved, 5 in progress.
Permian Basin Reliability Plan for regional transmission planning approved.
Consideration between 345 kV and 765 kV transmission line standards based on stakeholder input.
Texas Energy Fund's In-ERCOT loan program undergoing due diligence for 17 projects, 9,000 MW potential capacity.
PUC’s Legislative recommendations include establishment of minimum standards for infrastructure design, construction, and maintenance relating to the grid.
Investigation and report on Hurricane Beryl's impact and utilities' emergency preparedness.
Adoption of rules requiring utilities to have functional online outage trackers.
▶️ Representative Geren - Effect of High Voltage Line Implementation/Study on Distribution in the Permian Basin
Representative Geren inquired about whether high voltage line implementation or study has slowed distribution in the Permian Basin due to the previous bill.
ERCOT clarified that they're not slowing down and are taking a holistic view of needs both in the Permian and statewide.
The focus is on building the right type and amount of transmission distribution while considering customer costs.
Concerns about supply chain issues, especially around 765-kV, have been raised by Permian customers.
A technical workshop is scheduled to address these concerns and ensure that companies and suppliers confirm their capabilities.
The chairman feels comfortable that supply chain issues affecting March build-out will similarly affect July, emphasizing the need for diligence.
Representative Geren stressed that the bill was focused on implementation and urged it to proceed, as the study is already completed.
▶️Vice Chair Ana Hernandez - Question on Deloitte TEF Contract Refund
Discussion on the application review process for the Texas Energy Fund.
Request for Deloitte to refund 10% of their contract.
Status update: Deloitte is in the process of refunding the 10%.
Refund payments by Deloitte started in October and will conclude this month.
▶️Representative McQueeney - Questions on Drawbacks of High Voltage Lines and Penalties Enacted After Hurricane Beryl
Representative McQueeney inquired about drawbacks of high voltage lines aside from supply chain issues.
Thomas Gleeson explained that the other major concern is cost.
The cost difference between two plans for the Permian area is approximately $1 billion.
Some stakeholders expected a larger cost difference between the two build outs.
ERCOT is holding a working conference to gather input from suppliers and TDUs.
There is a focus on balancing high-quality infrastructure and customer cost.
Representative McQueeney questioned the sufficiency of the penalty implemented after Hurricane Beryl.
The current maximum penalty for violations is $25,000 per violation per day.
The adequacy of the penalty system is open for legislative review.
▶️Representative Turner - Questions on DRRS Timeline and TEF
ERCOT is developing a new dispatchable reliability reserve service expected to be implemented after the real-time co-optimization of ancillary services and energy scheduled for December of this year.
The Texas Energy Fund (TEF) has 17 projects in due diligence with $4.88 billion in loan requests, which would largely exhaust the allocated funds.
All $4.88 billion is allocated within the In-ERCOT loan program.
If the 17 projects move forward, it could add 8,861 megawatts to the grid, though this number might vary as projects progress.
There is a cap of $7.1 billion on the In-ERCOT loan programs in combination with completion bonus grants, and a 10,000 megawatt cap for new generation under the statute.
Any additional funding to the TEF would primarily support projects outside ERCOT, given ERCOT's megawatt cap.
The program originally envisioned by the legislature was a $10 billion program; doubling it could only increase ERCOT's capacity by roughly 1,100 MW above the current projects.
Additional projects not funded by the TEF but eligible for completion bonuses are anticipated, providing further growth in thermal dispatchable units.
▶️Representative Anchía - Questions on DRRS, TEF, Load Growth, and Market Design
Representative Anchía expressed concerns about the Texas Energy Fund, questioning its alignment with market objectives.
The ERCOT loan program has yet to produce any new operating megawatts on the grid.
Withdrawals from the ERCOT load program include NG Flexible Energy LLC due to supply chain issues, and AEGLE project was dismissed due to a fraud conviction of one of the principals.
Deloitte missed initially pre-screening their project and will have $7.3 million clawed back from their $100 million contract with PUC.
There have been no completion bonuses or grants awarded for projects outside of ERCOT or the Senate's backup power package.
TEF has not yet resulted in any new generation coming online.
Concerns were raised about load projections being overly high, necessitating tighter projection accuracy.
The projection is thought to be between 120GW and 130GW based on potential future interconnections in the next six years.
Discussion on market design emphasized the need for improvement; PCM (Performance Credit Mechanism) remains shelved.
Representative Anchía inquired if PURA allows sufficient regulation for grid stability, and the discussion indicated it does.
Market-based approaches are favored over government interventions for long-term grid stability.
▶️Chairman King - Questions on Disaster Mitigation, the Enforcement Division, and Public Safety
Discussion about inclusion of hurricane reports in handouts but absence of wildfire reports.
Review and approval of two disaster mitigation plans, with five more pending.
Utilities reporting on execution of mitigation plans.
Enforcement measures when utilities fail to comply with commission rules, involving potential penalties.
Current staffing of the enforcement division at around a dozen people.
Anticipation of future legislative changes requiring more oversight and increased staffing.
Memorandum of Understanding (MOU) between Railroad Commission and PUC, with no power severance requests to date.
Information on recent wildfires starting at oil field locations with safety violations.
Discussion on utility pole inspection programs not being mandatory and governed by the National Electric Safety Code.
No state guidelines for pole inspection, though legislative recommendations address this gap.
Utilities' voluntary pole inspection programs are not formally reported to the PUC.
PUC retention of voluntary program information for research and reports.
Public access to utility safety information via open records request.
ERCOT was created by the Texas legislature in 1999 with four major responsibilities: maintaining system reliability, facilitating competitive wholesale and retail markets, and ensuring open access to transmission.
ERCOT manages 90% of the Texas electric load across 75% of the land, covering over 1,200 units and 54,000 miles of transmission. It operates independently from FERC.
The ERCOT grid has evolved over 15 years, becoming more complex with elements like wind, solar, battery storage, electric vehicles, and demand response.
Challenges include intermittent generation from renewable sources and connecting new large loads such as data centers to the grid.
41% of the thermal generation fleet is over 30 years old, indicating significant ageing infrastructure.
Future projections include substantial load growth driven by HB5066 and sectors like data centers, hydrogen, and oil & gas.
Various scenarios for connecting large loads to the grid were discussed, including direct grid connection, power purchase agreements, and colocation.
Backup generation for large loads usually cannot be connected to the grid.
Post-winter storm Uri reforms have led to improvements, such as weatherization inspections and coordination with the Railroad Commission for critical loads.
▶️Representative Anchía - Questions on Winter Storm Preparedness
ERCOT has managed recent winter storms effectively, classified within a frequency range where they can handle the conditions.
If another storm as severe as Uri occurred, the outcome might differ; it is crucial to prepare for such outliers.
In 2011, load shedding was necessary due to insufficient weatherization of thermal units, unlike in recent storms where performance improved and no load shedding has occurred.
The performance of thermal units was crucial in managing recent storms, along with enhancements like better weatherization of thermal units and gas systems.
Solar and wind energy contributions during winter storms tend to be limited due to weather conditions and timing of peaks relative to sunlight availability.
Batteries can help stabilize the grid during short-duration winter storms, notably during scarcity conditions in mornings and evenings, but may not be as effective during prolonged three-day cold spells.
▶️Representative Anchía - Questions on Co-location on Transmission Costs
Benjamin Barkely mentioned that co-location might reduce transmission costs which are typically socialized.
Woody Rickerson explained that in scenario four, co-location could potentially avoid grid costs, which includes running transmission and distribution lines.
Co-location involves placing loads near generation to avoid or reduce transmission costs.
Woody Rickerson clarified that the main focus of the slide was on key cost allocation related to what load pays for transmission, rather than transmission costs specifically.
▶️Representative Raymond - Questions on Energy Growth
Representative Raymond inquired about the growth metrics in Texas since Winter Storm Uri.
ERCOT tracks overall load impact but not specific numbers of houses or businesses.
Summer 2023 was extremely hot, similar to the record summer of 2011, with a peak of 85,000 megawatt load.
Summer 2024 was milder compared to 2023.
Load growth for 2023 was at 6%, doubling from 3% in 2022.
The trajectory over the past few years has shown a steady increase in energy demand.
Discussion highlighted the need for urgency in managing growth due to increased energy demands.
Potential future growth was discussed in the context of business relocations, possibly influenced by political measures such as tariffs.
▶️Representative Geren - Questions About the Speed of Increasing Power Generation
Question raised about the fastest way to increase power generation on the grid considering projected load growth and population surge.
Woody Rickerson mentioned that batteries can be added to the system in under two years, and gas turbines in less than three years if conditions are optimal.
Discussion on the need for policy changes to speed up power generation installations.
Emphasis on balancing intermittent generation like wind and solar with thermal generation to maintain reliability.
Suggestions for policy changes that incentivize dispatchable generators.
The energy fund is discussed as a potential tool to incentivize additional power generation.
The importance of the reliability standard tool provided by the last legislative session was noted, which evaluates if the future grid will be reliable and how much additional dispatchable generation is needed.
Current challenges include the market not giving the right signals to increase dispatchable generation, with most recent installations being solar and batteries.
Common agreement on the need for market adjustments to encourage more dispatchable generation.
▶️Representative Raymond - Questions on Nuclear Energy
Discussion about the lack of private sector movement in the energy market.
Mention of Governor Abbott's enthusiasm for nuclear energy, specifically small modular nuclear reactors.
Current focus on small modular reactors as a quick way to increase nuclear generation on the grid.
Existing larger reactors are mentioned as 1,250 megawatt units, while new proposed reactors are smaller, around 60 megawatt.
Locations involved in test cases include Abilene, Texas A&M, and University of Texas.
Emphasis on these cases being pilot projects rather than commercial units at this time.
Overall focus on creating a pathway for nuclear generation to integrate into the Texas grid commercially.
▶️Chairman King - Question on Transmission Development
Question raised about the timeline coordination between generation and transmission build-outs.
Power generation build-out timelines range from two to three years.
Transmission build-out timelines typically range from four to five years.
A potential issue is identified where new dispatchable power is built but cannot reach customers due to transmission delays.
Efforts are made to match generation and transmission timelines by developers choosing strategic grid locations.
Benjamin Barkley is the public council and chief executive of the Office of Public Utility Council, appointed by Governor Abbott in late 2024.
The Office of Public Utility Council represents small commercial and residential consumers in utility proceedings, acting as an independent watchdog.
In 2024, OPUC participated in 78 contested cases and 37 projects before the Public Utility Commission (PUC), resulting in $2.2 billion in savings for Texas consumers.
The OPUC Public Council has served as a voting member of the ERCOT Board since 1999.
Residential and small commercial load grew by less than 25% over the past ten years, while industrial load surged by 250%.
Transmission investment costs should align with the benefits of the customer class.
A reexamination of the four coincident peak (4CP) methodology could benefit residential and small commercial consumers.
Reports suggest a surge in data center development in Texas, which may increase electricity demand.
Residential consumers must only pay their fair share of costs for new transmission projects.
A mechanism for determining the sustainability of forecasted load growth could be useful.
Proposes requiring large load-seeking interconnection to submit a deposit as a good faith investment.
Focus on litigation, as case expenses significantly affect consumer bills.
Suggested utility companies should cover half of rate case expenses beyond $50,000.
Emphasizes the need for reliable energy transmission at an affordable price as Texas continues to grow.
▶️Representative Anchía - Questions on Co-location and the Allocation of Transmission Costs
Discussion of policy considerations around co-location and its impact on transmission costs.
Co-location can help avoid socializing costs among ratepayers by eliminating certain transmission costs.
Concern that costs should be directed towards the load drivers, not residential and small commercial consumers.
The population of Texas is growing, but not as fast as large load increases.
Ensuring careful cost allocation to protect residential and small commercial consumers from bearing the majority of costs.
Acknowledgment that co-location results in fewer costs needing to be spread across consumers.
