Texas Lawmakers Say Independence of Power Watchdog Is at Risk

Naureen S. Malik
·2 min read

(Bloomberg) -- The independence of Texas’ power watchdog is under threat as utility regulators tighten their oversight of the role, according to two state lawmakers.

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The criticism comes after the Public Utility Commission of Texas (PUC) earlier this month solicited bids for a contractor to serve as an independent wholesale electric market monitor, or EMM, for the Texas grid.

Under the revised stipulations, the role would no longer be referred to as the “independent market monitor” to now reflect language in a 2005 statute. The monitor would also be required to notify the PUC ahead of time before speaking before any other body or conference. The PUC’s executive director would also be able to remove the monitor without the commissioners’ approval.

“We have significant concerns” because it’s critical that the monitor provide independent analysis that shouldn’t be influenced by politicians or bureaucrats, similar to an auditor, Lieutenant Governor Dan Patrick and State Senator Charles Schwertner wrote in an Oct. 11 letter to the commissioners. “It is imperative that this role is completely independent, not only from Ercot and market participants, but also from censorship by the Public Utility Commission.”

Texas’ power grid has been under scrutiny after it collapsed during a series of winter storms in 2021, killing hundreds as homes and businesses were left without electricity for days. The independent grid monitor has raised multiple red flags about market reforms since the storm.

The Texas PUC issued the request because the current contract is expiring with Potomac Economics, which has held the role since 2004. Carrie Bivens was named the director of the independent market monitor for the Electric Reliability Council of Texas, or Ercot, in April 2020. She has been vocal about some rule changes saying they contribute to market inefficiencies and significantly raise consumers’ costs. More recently, Bivens said new reserves procured this summer raised the value of real-time energy by $8 billion over three months.

Changing the name of the market monitor codifies the standard client-contractor relationship, PUC spokesman Ellie Breed said in an email. As a vendor, it’s appropriate for the market monitor to report to the PUC about where and when they are making public comments for work tied to the commission. The contractual oversight of the monitor is being delegated to the executive director like all PUC contracts, she said.

“For context, the word ‘independent’ describes the market monitor’s relationship to the Ercot ISO and market participants,” Breed said.

Potomac Economics declined to comment on the letter. Ercot said it does not have any involvement with PUC vendor contract negotiations.

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