During a hearing Thursday on last week’s power blackouts, state Sen. Brandon Creighton asked the chair of the Public Utility Commission, which oversees the power industry, for suggestions that might prevent a similar crisis from happening again.
DeAnn T. Walker had none.
“I can tell you for the past two weeks I have worked night and day trying to get power restored and trying to figure out the system,” said Walker, who has served on the Public Utility Commission (PUC) board since 2017.
The exchange was a highlight of the hearing of the Texas Senate Committee on Business and Commerce, where Walker and Bill Magness, CEO of the Electric Reliability Council of Texas (ERCOT), both testified. The Senate committee and the House committees on state affairs and energy resources held parallel, day-long hearings in Austin on Thursday after the deep freeze and days-long outages left dozens dead and more than 4 million households without power.
In the deregulated power market Texas created in 1999, ERCOT functions as a conductor responsible for keeping the Texas grid in balance. The PUC is a state regulatory agency with commissioners appointed by the Texas governor. The PUC has authority over ERCOT and over the electricity rates that private retail companies charge their customers, though it doesn’t have that power over municipal entities, such as CPS Energy, or electric co-ops.
During the hearings, Magness and Walker both claimed their entities don’t have enough authority to require changes that could have prevented last week’s disaster. Magness portrayed ERCOT as a grid manager with no regulatory teeth, with all of its actions overseen by the PUC.
“If the commission directs us to do something, we’re obligated to do it,” Magness said.
Walker disputed Magness’s characterization, painting ERCOT as having more autonomy.
“I know that I don’t have total and complete oversight” over ERCOT, Walker said, but conceded that the PUC does have authority over ERCOT’s budget and the approval of its board members. Five ERCOT board members resigned Wednesday after reports surfaced that they lived out of state.
“I can’t require their board members to resign … I can’t require Bill [Magness] to resign or anything,” Walker said. “I can’t set up how they’re organized and I certainly don’t operate whether or not to drop load or keep going. That is why we have them, is for that expertise.”
Walker and Magness pointed to the Texas Legislature as the ultimate source of their authority, or lack thereof.
“Y’all made us; you should change us,” Magness told senators. Walker had a similar statement.
“Y’all are the policymakers,” Walker said. “I’ve heard all of you loud and clear and I want to know what y’all expect and what you want.”
Creighton, a Conroe Republican, was among the senators who didn’t buy that. He expressed surprise at the lack of ideas from Walker, a former PUC lawyer and administrative law judge who later worked for CenterPoint Energy before joining the PUC’s board.
“I would contend that you are choosing not to use the authority that we’ve given you,” Creighton said. He read from Texas law stating the PUC has “complete authority” over ERCOT.
Walker paused for a moment.
“I don’t think that I understood this situation and the underlying issues until we have lived through this,” Walker responded.
Sen. Donna Campbell (R-New Braunfels) was among those who chastised Walker for this.
“You oversee the competitive electric markets,” Campbell said. “You oversee ERCOT’s budget and operations. You enforce statutes and rules for the electric industry. But yet you don’t seem to demonstrate the knowledge that it takes to do that, and that’s concerning.”
The debate is in many ways a repeat of 2011, when Texas last faced statewide blackouts amid severe cold weather. That led to new calls to prepare power plants to perform in cold weather, but regulators say they have no authority to enforce winter-weather upgrades.
As freezing conditions spread across the state the weekend of Feb. 13-14, power plants began going offline. Approximately 185 of the more than 680 generating units in the ERCOT system stopped providing power to the grid at least once during the storm, according to ERCOT.
Many experts cite a lack of incentives for power companies to keep extra generating capacity ready in case of extreme conditions. Of all the U.S. electricity markets, ERCOT consistently has the lowest margins of extra electricity generating capacity to serve as a cushion, according to the U.S. Energy Information Administration. Other regions have capacity markets, where power generators can make money by keeping power plants available when needed.
“Texas has always liked the idea that you get paid if you run,” Curt Morgan, CEO of Irving-based Vistra Corp., one of the larger power companies in the ERCOT market, told House members. “They’ve never liked having a capacity market.”
Some legislators seemed ready to discuss changes to a market that they say failed millions of Texans.
“We can never allow for our market system to allow innocent citizens to be hurt because generators don’t like it or traders don’t like it,” Sen. Jose Menendez (D-San Antonio) said.
Morgan and others who testified before the House committees Thursday said 2011 weatherization proposals adopted in did little to prevent outages in this year’s winter storm.
“To be honest with you guys, I think the emphasis on that kind of fizzled,” Morgan said, saying that the PUC hasn’t shown strong oversight over implementing weatherization. Walker said the PUC doesn’t have that authority.
Morgan chiefly blamed the Texas natural gas system, which he said was not able to supply enough gas at the right pressures to meet power plants’ needs.
“The big story here, in my opinion, was the failure of the gas system to perform,” Morgan said. “We do not have an integrated and seamless gas and power system.”
Mauricio Gutierrez, president and CEO of Houston-based NRG Energy, another large, integrated power company, said that NRG had followed all the 2011 winter weather guidelines for all its plants and added extra preparations as the storm bore down, but that “it was not enough.”
“We have a system-wide problem and we need to look at it as a system-wide solution,” Gutierrez said.