By Ann de Rouffignac
OGJ Online Staff
AUSTIN, Sept. 8, 2001 — With doubts gathering over the future of electricity deregulation in Texas, legislators grilled officials of the Electric Reliability Council of Texas at a public hearing Friday about a possible conflict of interest over a consulting contract and suggested changes that may need to be made to the ERCOT board.
The Electric Utility Restructuring Legislative Oversight Committee also questioned why officials who operate the electricity grid have not been more forthcoming with electricity retailers. State Rep. Steve Wolens (D-Dallas), cochairman of the committee, ordered the grid operator to release a report on the readiness of the systems, which retailers claimed ERCOT has withheld from them.
The systems have been criticized because of delays and errors that have led to setbacks to a pilot program scheduled to begin June 1, and now won’t be fully functional until late October. Retailers have complained bitterly to the Public Utility Commission of Texas about the delays, which are costing them millions of dollars. Last week Shell Energy Services LLC, a unit of Shell Oil Co., Houston, threw in the towel and withdrew from the Texas and Ohio retail electricity markets.
Retailers have criticized ERCOT for secretiveness in its dealings. Consumer groups have called for a full accounting of ERCOT expenses. There is “talk” of a “conflict of interest,” Wolens said.
ERCOT CEO Tom Noel said the grid operator signed a nondisclosure agreement with the vendor. But Noel testified there was no conflict of interest between the vendor and himself. However, Wolens said the vendor was also known to have contracts with Reliant Energy Inc., Houston, and TXU Corp., Dallas, in addition to the contract with ERCOT.
Reliant and TXU could have lost lose revenue if customers had received power from competitors during the hot summer months, some to wonder if there was an incentive to delay the pilot until fall. A representative from the vendor Accenture assured the committee no conflict existed.
Wolens asked the consultant and ERCOT officials to allow committee members and the Public Utility Commission to review the contract. The consultant agreed to have his lawyers look into it. Because the agreement with Accenture is “secret,” Wolens said retailers have complained they are getting “doubletalk” from ERCOT.
He suggested retailers need representation on ERCOT’s board because at present their voices are “muted,” when the board makes decisions. Legislators asked ERCOT to consider adding a representative of the retailers to the board. They also asked ERCOT witnesses appearing before the committee to invite members of the oversight committee to observe the vote.
Retailers also complained ERCOT hasn’t been forthcoming with information. Retailers said they need access to reports and audits conducted by a third party system administrator assessing the readiness of ERCOT’s computer systems to process retailer requests to switch customers to new providers.
“Market participants asked for the report and were denied,” said Vanus Priestley, of AES New Energy, a unit of AES Corp.
Noel denied audits by the test administrator had been completed or even existed. Subsequently ERCOT official Bill Bojorquez, director of settlements, conceded the test administrator conducted a “review” in the spring but said it was “incomplete.”
Noel denied knowing about any “reviews.” The disagreement over definitions of “audit” and “review” prompted Wolens to quip, “This is sounding Clintonesque to me.”
Bojorquez said the review was “poor and not a good characterization of the start up.” He said the draft would not be released. The report might have indicated how far behind preparations for the pilot program were running last spring.
Retailers needed to plan purchases of power based on estimates of when customers would actually be switched to new providers. “It would have been helpful to see the report,” Priestley said.
When pressed by Wolens about disclosing the reports, Noel said if Priestley had asked for the reports he would have taken care of the problem. “There is no limitation to who could look at these reports,” said Noel. “We will give the report to the board of directors and the PUC.”
Wolens instructed Noel to hand over the report to any retailer who asked to see it. “If you come back and say it won’t be ready until the end of September or Halloween, I will come unglued,” he said.
Concerning a similar report done in July, Bojorquez asserted it is not complete. Wolens asked that the report be released to the legislative committee and to the retailers within the next several days
State Sen. Frank Madla (D-San Antonio) added that he didn’t want the audits to be released with “18 minute gaps.” He said it worried him that a report would be “stored in a drawer” just because ERCOT didn’t agree with its conclusions.