Introduction of HB2663 by Representative Darby, with Senator Birdwell as the sponsor.
Purpose: To prevent wildfires and protect landowners by improving oversight of electrical infrastructure at long-term inactive oil and gas well sites.
Prompted by 2024 Panhandle wildfires due to neglected electrical equipment at inactive oil sites.
Current law requires removal of tanks and surface equipment but not aging electrical equipment.
HB2663 mandates operators to affirm removal of electrical equipment for plugging extensions on wells inactive for 10+ years.
Bill builds on current law under section 89.029 of the natural resources code without altering the ten-year framework for surface equipment removal.
Railroad Commission responsible for imposing up to $25,000 penalties for non-compliance or false affirmations by operators.
Discussion: Electrical service cable connected to a well must be removed or de-electrified after 10 years.
Practicality: De-electrification is an easy and cost-effective solution compared to complete removal.
The ten-year provision allows flexibility, avoiding the need for rebuilding electrical infrastructure before possible well reactivation.
Public testimony opened for HB2663.
Participants: James Henderson and Currie Smith from Texas Southwest Cattle Raisers Association and Cyrus Reed. David Lindley from Railroad Commission present as a resource witness.
James Henderson, representing Texas Southwestern Cattle Raisers Association (TSCRA) and landowner, testified in support of HB2663.
TSCRA represents 28,000 members and landowners in Texas.
Henderson served on a house interim committee on Panhandle wildfires, having conducted hearings in Pampa.
Wildfires in Texas resulted in over a million acres burned, causing death of 20-30,000 cattle alongside significant economic and personal losses.
Fires were attributed to poorly maintained electric poles and faulty electric equipment at oil and gas sites.
House Bill 2663 aims to prevent such incidents by requiring maintenance of well sites and enabling penalties for violations.
HB2663 mandates removal of electrical equipment from inactive well sites and grants authority to the Railroad Commission to impose fines up to $25,000.
Cyrus Reed from the Sierra Club expresses strong support for HB2663.
The investigative committee identified two primary problems; one addressed in another bill, and the other requiring action on old electrical equipment on inactive wells.
HB2663 aims to resolve issues related to old electrical equipment on inactive wells that pose fire risks.
The bill provides flexibility by allowing either the removal of the equipment or de-energizing it.
The goal is to prevent fires, as many have personally experienced their destructive impacts.
The bill is supported due to its potential to prevent such fires involving utility equipment.
No other comments were heard, and the discussion of HB2663 is left pending.
Jason Ryan from CenterPoint Energy supports HB4384.
The bill ensures consistent accounting for replacing old pipes and installing new ones.
CenterPoint serves nearly 2 million gas utility customers in Texas.
Ryan argues that potential negative outcomes are unlikely.
The bill aims to apply consistent accounting standards for new infrastructure due to state growth.
Consistent accounting provides financial benefits for CenterPoint and its customers.
Despite changes, the bill does not reduce the Railroad Commission’s oversight capabilities.
Ryan is open to addressing any questions from the committee.
▶️Senator Birdwell to Cyrus Reed, HB4384 - Cost Recovery Process Concerns
Cyrus Reed clarifies that HB4384 allows additional costs on consumers to be recovered before undergoing the full regulatory process.
The bill impacts ratepayers retrospectively, involving them in costs after infrastructure investments are made.
There is a discussion on the impact of growth, debt, and credit ratings on utilities, referencing the rapid development in areas like Tarrant County.
Concerns are raised about the lack of cost control mechanisms, as the bill does not specify limits on cost recovery which could burden consumers.
The comparison is made to the City of Austin's utility, where administrative cost increases are capped and require council approval if they exceed a certain threshold.
Potential solutions like implementing an intermediate check or using a model similar to Austin's utility are proposed to address these concerns.
Senator Birdwell considers a floor amendment to address intermediate checks while ensuring the growth and financial stability of utilities.
▶️Senator Hancock to Jason Ryan, HB4384 - Impact on Borrowing Costs
Discussion on the impact of HB4384 on borrowing costs and rates.
Jason Ryan explained the necessity of borrowing money due to the cash flow negative nature of the business.
Credit ratings directly affect interest rates and returns required by banks and investors.
HB4384 is considered credit positive legislation, improving credit ratings and borrowing conditions.
Lower borrowing costs benefit customers by reducing hidden costs and improving affordability.
The bill applies a proven framework used for replacement pipe to new growth investments.
No evidence was presented to show that the existing framework has been burdensome on customers.
▶️Senator Sparks to Jason Ryan, HB4384 - Cost Transparency
Senator Sparks inquired about the transparency and audit processes related to costs, referencing existing methods used for replacement pipe installations.
Jason Ryan explained the current transparent process involves annual filings with cities and the Railroad Commission, detailing expenditures.
He assured that this process avoids overspending and maintains checks on prudence of spending, with any disallowed costs being refunded to customers with interest.
The proposed bill HB4384 would adopt this same transparent process for new pipe installations.
Public testimony on HB4384 was closed without further comments, and the bill was left pending.
