87th Legislature – Week 9
Here is this week’s update on the legislative session …
Fallout from winter storm power outages continue. Last week saw an acceleration of changes and fallout from the winter storm power outages.
PUCT Chairwoman resigns, ERCOT CEO terminated. Personnel changes at PUC and ERCOT continued last week. First, on Monday, the PUC chair resigned. Although the PUC does not manage the grid, it does have an oversight role with respect to ERCOT. Moreover, as we mentioned last week, the chair is appointed by the Governor, making the position a partisan football. As we suspected, ERCOT CEO Bill Magness was also terminated last Wednesday. The CEO had refused to step aside so the Board moved forward with termination. Under his contract, Magness would have been entitled to a full year of salary (more than $800,000), but Magness said he would not accept the severance pay.
ERCOT pricing error caused $16 billion in extra costs to ratepayers. The termination of the ERCOT CEO preceded the revelation on Thursday that ERCOT had incorrectly and artificially held electricity prices at astronomical levels long after any such market intervention could have been justified. The finding came from the state’s independent market monitor. The move likely costs ratepayers an additional $16 billion. Later in the week, the PUC opted not to retroactively correct the move, saying that it would be too difficult to unscramble the effects of the market intervention. As a result, we expect more financial troubles for retail electric providers, as ratepayers are unable to pay the higher prices.
Brazos Electric Power Cooperative files for bankruptcy. The largest and oldest power cooperative in the state of Texas filed for bankruptcy this past week after notifying ERCOT that it could not pay a $2.1 billion bill from ERCOT. Brazos said the filing was necessary to protect its customers from having to pay these exorbitant costs. Other bankruptcies are expected, especially of retail electric providers (REPs) as they are unable to pass on the exorbitant wholesale prices REPs were forced to pay during the power outages. Relatedly, at least two REPs have been kicked off out of the market. Griddy Energy and Entrust Energy both informed ERCOT they could not make payments to ERCOT and in response they were barred from Texas’ power market.
Governor lifts statewide COVID restrictions; cases decline; vaccinations ramp up. On Tuesday, the Governor announced that he is lifting statewide COVID restrictions, allowing businesses to open 100% and rescinding the mask mandate – both effective this Wednesday, March 10. This comes as new cases and hospitalizations reach their lowest levels in nearly 6 months and vaccinations continue to rise rapidly. Nearly 200k Texans are being vaccinated a day. The state also announced that educators and child care providers would now be eligible for the vaccine.
Texas responds to migrant crisis on southern border. On Saturday, the Governor announced that he was launching Operation Lone Star to combat drug smuggling and human trafficking along the southern border. The Operation will have the Department of Public Safety leveraging the National Guard along the border, hoping to stymie the ability of drug cartels to smuggle drugs and move people across the Texas border. The move comes on the heels of news that illegal migration is surging to record numbers.
U.S. Senate passes COVID relief bill. The Senate narrowly passed a $1.9 trillion COVID relief package, similar to the one passed by the House of representatives last week. The bill includes $350 billion for state and local governments. The House version would have sent nearly $27 billion in state and local government relief to Texas, with $17 billion of that going directly to the state. Allocations based in the Senate version are not yet known, but we do not expect the number to change drastically from the House version. Any difference would arise from emphasizing unemployed workers instead of population. While the relief will certainly ease immediate pressure around the budget, the enormous costs of reforms related to last month’s winter storms add another layer of discussion regarding the use of these funds.
Bill filing deadline this week; Committees begin to heat up. Friday, March 12 will mark the 60th day of the legislative session and is the constitutional deadline for filing bills. With nearly 1500 bills referred in the House committee hearings are finding a regular pace. While fewer have been referred in the Senate, several priorities of the Lt. Governor will be heard this week.
Nearly 100 bills will receive committee hearings this week. A few major bills will receive hearings this week, including HB 3, which will make changes to how state and local governments respond to pandemic emergencies.
In the Senate, only 17 bills are currently schedule for a committee hearing, but one is the bill filed by Senator Bryan Hughes aimed at social media outlets. Last week, Senator Hughes and Governor Abbott hosted a press conference about SB 12. Also, two bills aimed at curbing controversial pandemic response measures used by local governments will also be heard in the Senate. Senator Kolkhorst’s SB 25 would allow nursing facility residents to designate at least one family member who has the right to in-person visitation. Senator Paxton’s SB 26 would prevent local officials from using their emergency powers to close places of worship.
Senate Finance will continue hearings on SB 1, the state’s budget, today at 10 am.