State Affairs

1 – HB9, relating to the development and funding of broadband and telecommunications services Glenn Hegar

Glenn Hegar – Comptroller of public accounts, HB9

• 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.

Gregory Conte – Director of Broadband – Texas Comptroller – HB9

• Director of the Comptroller’s broadband development office, testifying neutrally on HB9.
• Presented on the implementation of the Broadband Infrastructure Fund (BIF).
• The BIF was created through HB9 with $1.5 billion in general revenue.
• Completed a $155 million transfer to the Texas NextGen 911 system.
• Pending $75 million transfer to the broadband pole replacement fund.
• Outlined proposed uses for the remaining $1.3 billion to address the digital divide.
• Creation of a match program with state revenue for the federal BEAD program.
• Support for a second round of the broadband program (BOOT).
• Establishment of a middle-mile grant program.
• Targeting underserved locations for further grant funding.
• Investment in training opportunities to support labor force.

President & CEO Glenn Hamer – TX Association of Business  – HB9

• President and CEO of the Texas Association of Business, testifying neutrally on HB9.
• Highlighted importance of broadband for the state’s safety, job creation, and growth.
• Expressed support for continued investment to close the digital divide.

Q&A

• Speaker: Representative Raymond
  • Questioned the definition and selection of the 24 ‘critical counties’.
  • Conte explained the selection based on digital divide severity using federal data.
  • Discussed the difficulties and delays in the process, including federal challenges.
• Speaker: Vice Chair Hernandez
  • Inquired if mobile wireless coverage is included in the program.
  • Greg Conte clarified the focus is on terrestrial fixed broadband.
• Speaker: Representative Spiller
  • Expressed concerns about the accuracy of state versus federal broadband maps.
  • Conte explained the current use of federal maps and efforts to improve data accuracy.
  • Discussed prevention of double-dipping by applicants seeking both federal and state funds.
• Speaker: Glenn Hegar
  • Outlined complications in overlapping federal and state programs.
  • Confirmed prioritization of one program at a time to avoid funding duplications.
• Speaker: Representative Slauson
  • Requested identification of the 24 counties included in the NofA.
• Speaker: Chairman Raymond
  • Highlighted the need for future funding estimates to connect the whole state.

2 – HB2555, relating to transmission and distribution system resiliency planning by and cost recovery for electric utilities

Connie Corona – PUCT – HB2555

• Connie Corona, Executive Director of the PUC, is testifying neutrally.
• HB2555 establishes procedures for utilities to submit plans to strengthen transmission and distribution systems’ resiliency.
• The Commission has 180 days to review, approve, modify, or deny the plans.
• The rule governing the submission and approval process took effect in February.
• Plans must demonstrate clear benefits to customers and strengthen systems against resiliency events like hurricanes.
• Three resiliency plans have already been filed by CenterPoint, Oncor, and Entergy.
• Filings are contested cases involving numerous intervenors including ERCOT, cities, and customer groups.
• These plans are complex, often up to 1000 pages.
• Commission Staff will recommend approval of plan elements that provide clear protection for Texans.
• Plans must be decided upon within 180 days of filing.
• CenterPoint’s plan is currently paused for reevaluation.
• An update on CenterPoint’s plan will be provided in the fall.
• Updates on Representative Metcalf’s letter regarding the Entergy case will be provided.

Woody Rickerson – ERCOT – HB2555

• 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.

Chris Ekoh – OPUC – HB2555

• The review of resiliency plans focuses on the effectiveness of proposed measures to mitigate weather or security-related emergencies.
• There is no initial review process to assess prudence at the beginning stages of plan review.
• Customers bear the cost of the plans, regardless of whether they fail or succeed in mitigating the intended issue.
• A legislative fix is needed to allow cities or municipalities to review the prudence of these plans before implementation.
• High costs are involved in developing and implementing these resiliency measures.
• Current inability to assess whether the costs are justified or necessary before they are included in rates.
• Consumer benefits from these plans and accountability mechanisms for utilities are crucial aspects of the review.

Mark Bell – AECT – HB2555

• 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

Executive Director Adriana Cruz – TX Economic Development & Tourism Office – HB5174

• 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.

Jeremy Martin – Austin Chamber of Commerce – HB5174

• Jeremy Martin, Austin Chamber of Commerce represents over 1700 businesses in Central Texas. Testified neutral 
• Chamber supported the Texas Chips act during the 88th regular session.
• Texas has added about 60 new or expanded semiconductor manufacturing projects since 2020, half in central Texas.
• Samsung leads the growth with significant investments in Austin and Taylor campuses.
• Other key companies in the semiconductor industry in the region include Intel, Tokyo Electron, Silicon Labs, Infineon, NXP, and Applied Materials.
• More than $60 billion invested in Texas since the federal Chips act’s passage, with six projects expected to create over 8000 jobs.
• Emphasizes the importance of the Texas Semiconductor Innovation consortium considering the full spectrum of companies in the industry.
• Highlights the need to identify gaps in the federal Chips act, particularly in design intellectual property not covered by federal legislation.
• Sited Silicon Labs as an example of a company focused on design and intellectual property overlooked by the federal Chips act.
• Stressed the importance of including all companies involved from design to final product in the consortium’s consideration.

Glenn Hamer, CEO TAB – HB5174

• 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

 Connie Corona, PUCT – SB1699

• Connie Corona, Executive Director of PUCT testified neutrally on SB1699.
• Customer protections for the aggregate distributed energy resources (ADER) pilot program specified by SB1699.
• PUCT’s new energy efficiency division is operational with two out of three positions filled.
• Top priority is reviewing existing rules and implementing SB1699 requirements with input from nearly two dozen stakeholders.
• Phased approach to implementing complex rulemakings with anticipated completion of residential load reduction goals by December 1.
• Oncor’s smart thermostat program with incentives for retail electric providers to install smart thermostats is underway.
• Focus on collecting data to determine best practices for encouraging widespread deployment of smart thermostats.
• Overall goal is to benefit residential consumers by reducing energy usage and bills.

Woody Rickerson – ERCOT – on aggregated distributed energy resources – SB1699

• Woody Rickerson discussed aggregated distributed energy resources (ADERS).
• PUC directed ERCOT to develop a pilot for ADERS participation in the wholesale market in July 2022.
• ADERS consist of multiple small sites aggregated to be dispatched as one large site.
• The pilot includes multiple phases, each building on the previous one.
• The phased approach minimizes changes to ERCOT and distribution service provider systems.
• The pilot has gathered valuable information for eventual rule and system changes.
• Currently, the pilot involves 13 total resources, with an additional 5 MW potentially joining.
• Printed details of phase one and phase two to be provided to the clerk.

Chris Ekoh – Office of Public Utility Counsel – SB1699 

• Testifying neutrally
• He praised the bill for focusing on customer benefits and potentially lowering customer bills and enhancing grid reliability.
• OPOC supports practical and cost-effective strategies for customer participation in energy efficiency programs.
• Highlighted collaboration with the commission’s new Energy Efficiency division.
• Stressed the impact on low income, hard-to-reach consumers, apartment renters, and individuals with medical conditions.
• Demand response and energy efficiency programs reviewed for residential consumer benefits.
• Actively involved in the ADR pilot program and planning to continue collaborating with ERCOT.
• Representative Turner asked about the bill’s status and mentioned an amendment for widespread demand response devices for residential participation.
• Clarified that the rule-making process for the demand response program has started and aims to be completed by December.

Sam Chang – CenterPoint Energy – SB1699

• 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, Lone Star Chapter, Sierra Club – SB1699

• 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

Connie Corona, PUCT – SB2627

• Connie Corona, Executive Director, PUC, testified neutrally. 
• Update on four Texas energy fund programs.
• ERCOT Loan Program: Loan application period concluded with 72 applications worth $24.5 billion.
• Next steps include reviewing applications and recommending projects by August 29 open meeting.
• Selected projects will undergo a due diligence phase before loan agreements are executed.
• Loan disbursements planned to begin before the late 2025 statutory deadline.
• Backup Power Package Program: Contract finalized for research entity to develop specifications.
• Advisory committee reports expected in fall to design the program.
• Grants Program: Draft rules to be available this fall for public comment to design program.
• Completion Bonus Grant: Bonuses paid over ten years for newly constructed generation facilities meeting performance standards.

ERCOT’s Sr. VP & COO Woody Rickerson – SB2627 

• Testifying neutrally
• ERCOT’s engagement with TEF projects begins when an applicant for a TEF loan enters the ERCOT generation interconnection queue.
• Entering the interconnection queue is required before a generator can connect.
• Currently, very few TEF projects are in the interconnection queue.
• ERCOT will facilitate TEF projects through the interconnection process as they enter the queue.
• A tracking system will be implemented for TEF awarded projects entering the queue.
• TEF projects will have a priority status in the interconnection process.
• ERCOT will track the status, quantity, and timeline of TEF projects connecting to the grid.
• Woody Rickerson offered to provide additional numbers related to the 38,000 figure and existing interconnection queue.

Deputy Public Counsel Chris Ekoh – SB2627

• Chris Ekoh, Deputy Public Counsel, testified neutrally.
• OPUC has no direct role in administering the Texas Energy Fund.
• OPUC looks forward to participating in interconnection processes at the ERCOT level.
• OPUC will be involved in TAC processes and stakeholder processes.

Powering Texans’ CEO Walt Baum – SB2627

• Walt Baum, Powering Texans testified neutrally on SB2627 implementation.
• PUC received applications for 38,000 MW of dispatchable power, down from initial 55,000 MW intents.
• Application process was detailed, weeding out less feasible projects.
• His companies (Calpine, NRG, Constellation, Vistra) filed for over 5000 MW of gas generation.
• Highlighted the importance of PUC considering long track records when evaluating applications.
• Discussed TEF as a tool to jumpstart new power plant construction.

Michele Richmond, TCPA – SB2627

• Michele Richmond, TCPA, testified neutrally on SB2627.
• TCPA member companies filed applications to build over 7,400 MW of gas generation under TEF.
• SB2627 criteria focuses on financially viable entities with experience in building, owning, and operating power plants.
• 9 out of 13 companies that applied have extensive national experience and are considered most qualified.
• TEF can achieve its objectives while safeguarding taxpayer funds by selecting experienced and reliable applicants.
• Recognition of PUC for successfully establishing a new program with a thoughtful rulemaking process.
• PUC’s support was evident through a detailed application guide, a responsive information email, hotline, and updated FAQs.
• A webinar was conducted for applicants, allowing questions to be submitted in advance, facilitating transparency.
• The process is progressing smoothly, and due diligence depends on the promptness of feedback and document submission.
• Hope to execute loans by the first quarter of 2025.

Julia Harvey – TEC – SB2627

• Julia Harvey, VP of government relations at TEC, testified neutrally on SB2627.
• PUC adopted a rule for the ERCOT loan program, receiving applications for over 38 gigawatts of dispatchable generation.
• A third-party administrator will assess applications based on the rule, with the commission deciding approval or denial.
• Rules are in place for the ERCOT completion bonus grant program and the committee overseeing the backup system authorized by SB2627.
• The development of the program outside of ERCOT is pending, with cooperatives outside of ERCOT showing interest.
• Investment community’s interest in the loan program was expected, recognizing the need for additional dispatchable generation to ensure reliability.
• More scrutiny is needed around some load numbers in ERCOT’s forecasts, due to the rapid state growth.
• SB2627 and other market-based tools in development will help meet resource adequacy needs.

Cyrus Reid of the Sierra Club – SB2627 

• 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.

Mark Bell – AECT – SB2627

• Mark Bell, President of the Association of Electric Companies of Texas, testified neutrally.
• SB2627 created the Energy Fund, which has been very successful and beneficial for capital investment in the ERCOT market.
• There is significant interest in this fund, highlighting the value of the wholesale competitive market in Texas.
• Wholesale generation companies have submitted applications to participate in the Energy Fund.
• SB2627 provided $1 billion in resiliency grants for non-ERCOT utilities to modernize, weatherize, and enhance their reliability and resiliency.
• The bill also authorized $1.8 billion for the Texas Power Promise to fund backup power for emergency services.
• The provisions of SB2627 are still under consideration at the PUC.
• The Texas Energy Fund aims to spur the construction of new dispatchable generation and fund resiliency projects.
• These efforts are intended to strengthen the electric system and ensure a safe, reliable, and resilient supply of electricity.

Tony Bennett – Texas Association of Manufacturers – SB2627

• Tony Bennett, TAM, testified neutrally on SB2627.

• He praised the creation of the Texas Energy Fund (TEF) for improving grid reliability.
• TEF is intended to address limited capital and financing for gas-fired and other thermal dispatchable generation investments.
• TEF complements market design changes like the DRRS.
• Combination of TEF, DRRS, and enhanced funding for distribution system projects can create a resilient grid and enhance consumer confidence in ERCOT.
• Stressed the importance of utilities and the PUC utilizing these targeted resiliency efforts to improve actual customer reliability experience.

Hector Rivero – TCC – SB2627

• 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 – SB2627

• 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

Connie Corona – PUCT – HB1500

• 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 – HB1500

• 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.

Chris Ekoh – OPUC – HB1500

• Chris Ekoh, Deputy Public Council OPUC, testified neutrally on HB1500.
• Announced implementation of four main recommendations from the Sunset Commission
• Completed formal analysis for outsourcing consultants and legal expert witnesses by March 22, 2023.
• Published a request for qualifications to expand the pool of consultants and experts by May 1, 2023.
• Required and obtained conflict of interest statements from consultants and experts by December 21, 2022.
• Implemented documentation and use of expert witness performance information for future awards by March 9, 2023.
• Actively engaged and participating in all PUC and ERCOT ongoing rulemakings and projects.
• Filed and replied to comments in these rulemakings as warranted.
• Increased board-level activities and engagement.

Cyrus Reed – Lone Star Chapter, Sierra Club – HB1500

• Provided a 13-page written testimony, focusing on HB1500 from pages 2 to 5.
• PUC has made positive changes for public engagement and website improvements.
• All ERCOT protocols now require approval by PUC commissioners, enforcing a formal process.
• Section 9 rulemaking by PUC was well-executed, although not fully supported by Sierra Club.
• Sierra Club supports battery storage inclusion in DRRS protocols.
• Reliability standards discussion continues from SB3 into HB1500, viewed as PUC and ERCOT obligation.
• Support for guardrails in the PCM and the forthcoming cost-benefit analysis.
• Discussion on sections 39 and 40 regarding backup generation may need changes.
• Awaiting full analysis of ancillary services costs as required by HB1500.

• Formalization of ERCOT protocol approvals.
• Positive feedback on Section 9 rulemaking.
• Support for PCM guardrails and cost-benefit analysis.
• Potential changes in backup generation protocols.

Walt Baum – CEO Powering Texans – HB1500

• Walt Baum, CEO of Powering Texans, testified neutrally on the implementation of HB1500.
• Both the PUC and ERCOT are busy with various rulemakings given to them.
• Members are actively participating in the process, with a key focus on reliability standard rulemaking.
• The reliability standard rulemaking is critical for setting the course for other market structure changes.
• New and existing ancillary services and new products like DRRS and PCM are being considered.
• Once rules are written, a cost-benefit study will determine the most cost-effective way to meet reliability standards.
• The PUC will make decisions based on this study.
• Emphasized the importance of Texas indicating it is open for business and can meet growth demands.
• Highlighted the need for a healthy and competitive generation market to meet future load.
• Noted that Wall Street observers monitor PUC and ERCOT decisions closely, impacting market stability.
• Stressed the need for certainty in the market to ensure continued investment.

Michele Richmond – TCPA – HB1500

• Michele Richmond, TCPA, testified neutral on HB1500.
• Positive direction in HB1500 implementation by the commission and ERCOT.
• HB1500 aims to sustain investment from the energy fund.
• Importance of the reliability standard being finalized by PUC in August.
• ERCOT’s conservative grid operation post-winter Storm Uri to be reflected in the market.
• Avoiding out-of-market interventions by aligning operations with market incentives.
• Energy and ancillary services as main drivers for the reliability standard.
• Each aspect of ERCOT market needs to work together for optimal outcomes.
• Concerns about regulatory certainty affecting forward markets.
• Investors are closely watching Texas and ERCOT for market stability.
• Anticipation for DRRS implementation to drive investment in dispatchable generation.

Julia Harvey – TEC – HB1500

• Julia Harvey, TEC, testified neutral on HB1500.

• Gave thanks to committee leadership and PUC staff for implementation efforts.
• HB1500 was viewed favorably and expected to improve ERCOT reliability long-term.
• Highlighted three significant regulatory changes under HB1500: generation interconnection cost allocation, DRRS, and generation reliability requirements.
• Transmission cost allocation provision assigns portion of costs to generators, reducing consumer burden; effective starting 2026.
• DRRS development delayed for better design and functionality; aims to manage system uncertainty through market-based products.
• Generation reliability requirement to be effective in 2028; details still pending.
• HB1500 is seen as part of achieving fair load payment and reasonable revenue expectations for generators.
• Overall progress made with room for further development in areas like reliability standard and real-time co-optimization.

Mark Bell – AECT – HB1500

• Mark Bell, AECT, testified neutrally on HB1500.
• HB1500 included process improvements and numerous policy changes for the electric industry.
• Changes addressed the new transmission interconnection cost allocation requirements to promote efficient generation siting decisions.
• Modifications to the competitive wholesale market operations were made, including the creation of the dispatchable reliability reserve service.
• Provisions were included to incentivize new thermal builds and retain existing thermal plants.
• Farming requirements for new generation and other guidelines were introduced.
• An annual report to the PUC on the competitive retail market was mandated.
• Several studies on electric market and operations improvements were required.
• Since the last session, the PUC, ERCOT, member companies, and stakeholders have been actively implementing the outlined provisions.
• Investment in electric infrastructure depends on regulatory certainty and clear rules.
• The legislature has provided tools over the past two sessions to assist in meeting the state’s growth.
• Bell expressed anticipation in continuing efforts to implement measures from HB1500.

Tony Bennett – Texas Association of Manufacturers – HB1500

• Tony Bennett, TAM, testified neutrally on HB1500.
• TAM represents over 600 manufacturers, many of which are large employers in Texas.
• Key provision in HB1500 mandates the PUC to establish a target reliability standard to evaluate ERCOT’s market health.
• In the past, ERCOT has used reliability targets to manage the Texas grid’s health.
• Consumers support a reasonable reliability standard to ensure the market meets current requirements.
• Consumers also support the PUC using this standard to adjust new ancillary services like the dispatchable reliability reserve service.
• PUC should avoid establishing a mandated reserve margin or any other capacity market style construct due to cost concerns.
• A reliability standard isn’t the PUC’s only or best tool for addressing extreme weather events.
• Innovative tools like the Texas Energy Fund encourage dispatchable energy investment and enhance grid reliability.
• TAM supports enhanced funding for distribution systems to improve resiliency and consumer trust in ERCOT.
• Most consumer outages are due to distribution system issues rather than power generation failures.
• TAM believes it’s important to fully utilize targeted resiliency efforts.
• Diverting funds to programs like the PCM is seen as burdensome and unnecessary for enhancing reliability.

Hector Rivero – Texas Chemistry Council – HB1500

• 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.

Jean Ryall – APA – HB1500

• 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.

Dean Foreman – Texas Oil & Gas Association – HB1500

• Dean Foreman, chief economist for Texas Oil & Gas Association, testified neutrally on HB1500.
• Foreman represents members producing 90% of Texas crude oil and natural gas, including refineries, pipelines, and LNG export facilities.
• Supports establishment of ancillary services program to mitigate market uncertainty and ensure grid stability and reliability.
• Acknowledges the PC’s decision on NPRR1224 to eliminate the price floor on ERCOT contingency reserve service, stating it’s important for consumers.
• Emphasizes the need for PUC to understand the roles of each ancillary service and to avoid redundancies with the PCM.
• Stresses that the PUC and ERCOT should ensure cost-effective and non-burdensome programs for market participants.
• Supports transmission owners recovering interconnection costs as long as they are reasonable and do not hinder new generation capacity growth.
• Advocates for annual cost reports and performance requirements to provide insights but urges against creating unnecessary administrative burdens.

6.2 – Assessing utility preparedness, response, and recovery protocols, as well as reviewing recent performance in addressing severe weather events

Jason Wells – CenterPoint CEO

• 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 – MidSouth Electric Co-op 

• 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.

Jason Wells – CenterPoint’s line skills

• 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 – CenterPoint’s Mitigating Risk Factors

• 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.

Kerry Kelton on reliability and resiliency planning upgrades

• Focus on balancing reliability and affordability for their electric cooperative.
• 12% of overall revenues spent on O&M, power costs at 65%.
• Right of way budget is approximately $3 million annually, equating to $1,100 per mile of line.
• Residential ratepayers pay about 14 cents per kilowatt-hour.
• Vegetation management cycles vary from three to five years, depending on the area.
• In a recent event, 75% of residential rate payers experienced power outages, full restoration took about four days.

• Thankfulness to first responders and linemen during the power outage event.
• Concerns about threats and assaults on linemen during restorations.
• Frustrations around insufficient communication during power outages; suggestions for better notification systems.
• Need for more comprehensive and direct communication methods during emergencies.
• Issues with priority lists for critical care customers; confusion around yearly renewal requirements.
• Urgency to improve restoration times and avoid repeated outages particularly for critical facilities like the West Houston airport.
• Discussions around the high cost of leasing versus buying generators due to legislative restrictions.
• Importance of incentivizing transmission and distribution companies to invest in resilience and infrastructure.

• Emphasis on increasing vegetation management budgets.
• Implementation of composite poles for stronger and more reliable infrastructure.
• Analyzing and improving direct communication with critical facilities to avoid future prolonged outages.
• Possible legislative actions to mandate infrastructure investments and improve critical customer data sharing.
• Developing partnerships with local community leaders for better preparedness and response communication plans.
• Independent after-action assessment by end of October to determine further necessary improvements.

Thomas Gleeson – PUCT – Chairman with update on activities 

• Provided a brief update on activities following a directive by the governor.
• The PUC is opening an investigation to study events around Hurricane Beryl—preparation, activities during the storm, and post-storm restoration.
• Committed to delivering a report with findings and recommendations to the governor by December 1.
• The investigation covers issues like communication, vegetation management, mobile generation, and overall storm hardening of the grid.
• All RFIs and company responses to be made public for transparency.
• Discussed a potential solution for quick vegetation management with CenterPoint by setting up a portal for consumers.
• Investigation to explore short, medium, and long-term solutions, and necessary statutory changes.

CEO Pablo Vegas on ERCOT’s prepared readiness & feedback on Hurricane Beryl

• President and CEO of ERCOT, testifying neutrally.
• 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.

OPUC’s Deputy Public Counsel’s Chris Ekoh on the public interest

• Deputy Public Counsel, Office of Public Utility Council, testifying neutrally.
• Raised concerns about the impact on the public, reporting 36 lives lost across various counties.
• Emphasized OPUC’s role in providing resources and information to consumers during emergencies.
• Mentioned increased calls and the need for improved communication systems.

TDEM’s Chief Nim Kidd on their Hurricane Beryl response

• Chief of the Texas Division of Emergency Management, testifying neutrally.
• Thanked state leadership and highlighted the agency’s role in disaster response.
• Discussed the importance of local officials in disaster management.
• Mentioned the staging area for resource distribution in disaster aftermath.