Gavel To Gavel 87th Legislative Session: March 5, 2021
Tuesday, Gov. Greg Abbott issued an executive order rescinding his statewide mask mandate and permitting all businesses and facilities to open at 100% capacity. The Lieutenant Governor and Speaker of the House have both issued statements in support of the order. Speaker Dade Phelan also indicated that COVID-19 rules may be relaxed in the Texas House, pending a vote of the full body. It is unclear exactly what this will mean for legislative activities, as we have not yet seen updated Capitol guidelines from the State Preservation Board, nor can we be certain of the outcome should the House and Senate hold votes to revise the rules.
Leadership of the Electric Reliability Council of Texas (ERCOT) and the Public Utility Commission (PUC) stepped down this week, following widespread criticism after Texas’ winter storm, (recently given the name “Winter Storm Uri”). PUC Commissioner DeAnn Walker resigned, and has since been replaced as chair by Comm. Arthur D’Andrea. On Wednesday, the ERCOT board convened in a private session that culminated in the termination of Bill Magness, ERCOT President and CEO. He is the most recent departure after seven other board members resigned last month.
The financial machinations of the energy grid were upended during the storm, creating more than a few knots to be untangled in its wake. Potomac Economics, the PUC’s independent market monitor, found that ERCOT erroneously overcharged power companies to the tune of $16 billion. The PUC raised energy prices to $9,000 per megawatt-hour in order to incentivize power generation and balance the volatile relationship between supply and demand that was caused by the storm. ERCOT maintained emergency alert status until the morning of Friday, February 19th, consequently maintaining the higher prices. However, the monitor found that ERCOT should have dropped the prices when widespread outages ended on the 17th. The PUC has announced that they will not reverse the charges, stating that such a move would have unintended consequences.
Additionally, in response to recommendations from the Independent Market Monitor (IMM), the PUC voted to claw back payments ERCOT made to generators for ancillary services which were not actually provided during the storm. Ancillary services are electricity reserves contracted in advance and designed to help ERCOT maintain energy transmission and reliable operation. The IMM identified instances during the storm where ancillary services were paid for but not ultimately provided due to forced outages or diminished capacity. The PUC therefore ruled that payments made to electric generators that failed to provide must be returned.
The House Committee on Insurance heard invited testimony from insurance industry leaders on the financial consequences of the storm. While the full scope is still uncertain, early estimates from the industry project billion-dollar losses. Albert Betts, Executive Director for the Insurance Council of Texas, stated that in terms of losses, this will be the most significant winter storm event in Texas history. Further, he said that at least 150,000 claims had been filed as of March 2nd, most of which are expected to be homeowner claims. Doug Slape, Deputy Commissioner for the Texas Department of Insurance (TDI) told legislators that they can expect top-sheet loss estimates on March 12, and the information will continue to be updated weekly.
In other news, House Speaker Phelan has appointed Rep. Armando Walle to the Legislative Budget Board, replacing Rep. Oscar Longoria. Rep. Mary Gonzalez has also been reappointed.
This week, the Department of State Health Services (DSHS) notified vaccine providers that they should include school and child care workers in vaccine administration. Additionally, the DSHS announced that more than one million first doses of COVID-19 vaccine will be shipped to providers throughout the state for week 13 of vaccine distribution.