On Tuesday morning, Arthur D’Andrea was still sitting comfortably atop Texas’ Public Utility Commission, the regulator that oversees the state’s electricity system. But later that night and just 13 days after being named PUC Chair, Gov. Greg Abbott asked for and accepted D’Andrea’s resignation, hours after the Abbott appointee was caught on tape telling Wall Street investors who profited from Texas’ deadly winter storm that he had their backs.
D’Andrea’s ouster came hours after Texas Monthly broke the news
that D’Andrea had assured investors last week in a private conference call organized by Bank of America that he would do everything he could to make sure Texas didn’t retroactively go back and adjust the price of electricity that was charged during February’s winter disaster. Repricing the energy charges during the storm would save power utility companies billions of dollars and could stave off electricity rate increases for Texans who might see higher bills going forward because of all the money their power providers lost.
All three seats on the PUC are appointed by the Texas governor. D’Andrea was promoted from PUC commissioner to chair by Abbott on March 3, after former chair DeAnn Walker resigned after getting raked over the coals by the Texas Legislature during their investigation into what caused five million Texans to lose power during the storm. A few days later, the PUC’s only other member, Commissioner Botkin, resigned as well.
At the time that Gov. Abbott promoted D'Andrea to chair, critics wondered how the PUC was going to chart a new course by appointing someone already on the board, who'd been there for over three years, and who was in agreement with its present way of doing business.
That left D’Andrea feeling pretty good about his job security, and he told investors as much: “I went from being on a very hot seat to having one of the safest jobs in Texas. I think it’s just going to be me for a while,” Andrea said on the call.
He also said he doesn’t expect the Legislature to radically reform the Texas energy market, even after the winter storm killed 57 Texans, many of whom froze to death in their homes because their electric heaters were left powerless.
“I think the Legislature will do some of that, but I don’t expect to see a ton,” D’Andrea said.
Just hours after the Texas Monthly
story on D’Andrea’s call was published, Abbott issued a statement confirming that the PUC chair was headed out the door. “Tonight, I asked for and accepted the resignation of PUC Commissioner Arthur D’Andrea,” Abbott wrote. “I will be naming a replacement in the coming days who will have the responsibility of charting a new and fresh course for the agency. Texans deserve to have trust and confidence in the Public Utility Commission, and this action is one of many steps that will be taken to achieve that goal."
The controversy over whether or not Texas should go back and retroactively reprice the rate ERCOT (the Electric Reliability Council of Texas) charged for electricity, under the PUC’s watch, during the storm-induced outages has led to a widening rift between Abbott and Lt. Gov. Dan Patrick, with Patrick on the side of repricing and Abbott adamantly opposed.
When a huge chunk of the state’s power generators went offline when the winter storm hit, ERCOT, bumped up the cost of electricity 10,000 times its typical amount to $9,000 per megawatt-hour, the maximum price allowed by law.
Texas’ free-market energy system relies on increasing the cost of power in times of high demand to give power generators the incentive to crank out more electricity, although the storm-induced price increase was definitely unprecedented. The independent monitor that oversees the PUC reported last week that ERCOT kept the price of power at that $9,000 cap way longer than it should have, resulting in an estimated $16 billion overcharge to Texas power companies.
On the leaked call, D’Andrea promised investors that he would “put the weight of the commission in favor of not repricing.”
When D’Andrea was summoned to testify before the state Senate’s Jurisprudence Committee Thursday, Patrick stopped by to grill the then-PUC Chair himself, an unusual move for the lieutenant governor.
Patrick pushed hard for D’Andrea to order ERCOT to lower the charges, which he contends the PUC has the power to do, but D’Andrea claimed that the energy repricing would be illegal under Texas law. Even if he could order the repricing, D’Andrea argued it could lead to damaging unintended consequences for the state's energy market that the regulator couldn't predict.
“In light of the PUC Chair’s refusal to take any corrective action, despite the fact that he has the authority and the evidence is clear, I am asking Gov. Abbott to intercede on this issue,” Patrick said Friday. He also asked Abbott to fire D’Andrea: “Mr. D’Andrea’s position requires both professional competence and honesty and he demonstrated little of either in the hearings yesterday,” Patrick said.
Abbott quickly fired back: “As a former Texas Supreme Court Justice and former Attorney General, I agree with the position of the PUC Chair about his inability to take the action you requested,” Abbott wrote in a letter to Patrick. “You asked that I ‘intervene to ensure the right thing is done.’ The Governor does not have independent authority to accomplish the goals you seek,” he continued, and claimed that “The only entity that can authorize the solution you want is the legislature itself.”
This week, Patrick had the state Senate pull some procedural trickery to quickly pass a bill that would force the hand of the PUC to go ahead with repricing the storm-induced electricity charges, but Texas House Speaker Dade Phelan said in a statement that the House won’t even bring it to the floor for a vote.
Siding firmly with Abbott, Phelan said repricing would be “an extraordinary intervention into the free market, which may have major consequences for both residential and commercial consumers going forward.”
Texas Attorney General Ken Paxton gave Patrick an assist Tuesday morning when he announced he believes it would in fact be legal for the PUC to make a repricing order. Paxton wrote
that because "the Public Utility Commission has complete authority to act to ensure that ERCOT has accurately accounted for electricity production and delivery among market participants in the region," he believes that a "corrective action" by the PUC to order repricing "does not raise constitutional concerns."
Abbott didn’t admit that the Texas Monthly
story revealing what D’Andrea was promising investors is what led him to kick the regulator to the curb, but given that the governor went to bat for D’Andrea after Patrick called for his head last week, and the fact that the announcement came mere hours after the story broke, it’s pretty easy to put two and two together on this one.
D’Andrea’s cushy gig isn’t the only casualty from the whole repricing controversy. It’s also torn up the unified front Abbott, Patrick and Phelan were so proud of showing off to the world just a few weeks ago at the start of the legislative session.