87th LegislatureEnergyState HouseState SenateTexas Senate and House Power Grid Feud Bubbles Over Again

Capitol heavyweights are again throwing punches over the state's response to the power grid blackouts of February.
October 1, 2021
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Two of the biggest voices on Texas’ power grid post-blackout reforms, Lt. Governor Dan Patrick and Rep. Chris Paddie (R-Marshall), mixed it up once again, renewing a summer-long fight over the state’s securitization legislation.

“Securitization” is industry jargon for government-issued, above-market-rate loans to companies meant to cushion the financial blow many companies faced during the February blackouts. When wholesale electricity prices jumped to $9,000 per megawatt-hour (MWh) and remained there for a 32-hour period longer than the original Public Utility Commission (PUC) order stipulated, a $2.1 billion “overcharge” rippled through the power industry.

Those loans will allow the companies to defray the debt payments over a longer period of time than they otherwise could, ideally preventing a sharp fee applied to the company’s ratepayers.

That legislation passed and the basic idea was supported by both chambers. Where the disagreement came was on another piece of industry jargon — “netting.”

Netting refers to the criteria set for the beneficiaries to qualify for loans. While many companies lost a lot of money, some were subsidiaries of larger companies that on net emerged from the blackouts in the black.

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On the one side, Patrick and the Senate insist that their legislative intent was for companies that fit that description to be ineligible for the loans. On the House side, spearheaded by Paddie, the legislative intent was for the loans to “be applied to all load serving entities on a load-proportionate and equitable basis.”

Paddie chairs the powerful House State Affairs Committee through which every power grid-related bill moved.

In a Thursday meeting, the PUC sided with Paddie’s position when establishing its regulatory rule for securitization.

“I, and the members of the Texas Senate, have repeatedly made clear to the PUC we always intended any company’s uplift to be a net of losses against profits. Winners do not need a bailout,” Patrick said an a rebuking statement.

“The Senate passed House Bill 4492 because the $2.1 billion was only intended to support those entities who had net losses. It was never intended to assist those companies who profited during the winter storm.”

He then took it a step further and accused Paddie, who announced his retirement last week, of misleading the PUC and lining up a lucrative lobby position in the utility industry.

“The House author of House Bill 4492, Rep. Chris Paddie…has been disingenuous throughout the legislative process and after,” Patrick stated. “After passage of the bill, Rep. Paddie wrongly told the PUC the legislative intent of the bill did not include netting, despite on the record evidence during the passage of the bill to the contrary.”

“Now, his motivations have been exposed as he prepares to leave the legislature and may be seeking a highly compensated position in the same electric industry that stands to benefit from his position of no netting and no transparency. Rep. Paddie has forfeited his credibility with my office and with many members of the Texas Senate.”

On Thursday evening, Speaker Dade Phelan (R-Beaumont) issued a statement defending his chairman. “In my time in the Texas House, I’ve been fortunate to work with smart decision makers in energy and electricity policy like Rep. Chris Paddie and Sen. Kelly Hancock,” Phelan said.

Hancock was removed as chair of the Senate Business & Commerce Committee, which dealt substantially with the blackout fallout, after he publicly opposed the lt. governor on repricing — a related fight over the PUC’s violation of its own order to keep prices at the cap during that 32-hour window after the requisite emergency conditions had subsided.

Phelan added, “I am grateful for Chairman Paddie’s steady leadership, his character, and his integrity, all of which were integral to the passage of landmark legislation in the aftermath of Winter Storm Uri.”

The speaker then said he asked Paddie to convene his committee for hearings on the power grid and status of the legislature’s directed reforms.

Agreeing to the hearings, Paddie responded, “Thank you, Mr. Speaker.  I am proud of the work that the State Affairs committee & the House, as a whole, did this session.”

The tiff between Patrick and Paddie aggravates the disagreement between the two chambers on one item within a broader issue that has featured substantial agreement.

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Brad Johnson

Brad Johnson is an Ohio native who graduated from the University of Cincinnati in 2017. He is an avid sports fan who most enjoys watching his favorite teams continue their title drought throughout his cognizant lifetime. In his free time, you may find Brad quoting Monty Python productions and trying to calculate the airspeed velocity of an unladen swallow.