Tuesday, April 25, 2006

9:00 a.m.

Betty King Committee Hearing Room, 2E.20






Pursuant to a notice posted in accordance with Senate Rules 11.10 and 11.18, a public hearing of the Senate Committee on Business & Commerce was held on Tuesday, April 25, 2006, in the Betty King Committee Hearing Room, 2E.20, at Austin, Texas.




MEMBERS PRESENT:                                                      MEMBERS ABSENT:

Senator Troy Fraser, Chairman                                               Senator Kip Averitt

Senator Kyle Janek, Vice Chairman                                       Senator Eddie Lucio, Jr.

Senator Kenneth Armbrister

Senator Kim Brimer

Senator Kevin Eltife

Senator Craig Estes

Senator Leticia Van de Putte




The Chair called the meeting to order at 9:05 a.m.   Chairman Fraser welcomed Senator Janek to the Committee, the new Vice Chairman of the Senate Committee on Business and Commerce.


Chairman Fraser advised the Committee would be discussing the rolling blackouts that happened on April 17, 2006 that affected the state of Texas.  In relation to interim charge #3 relating to the on-going implementation of SB 7, 76th Legislature, with particular emphasis on evaluation of the following: adequacy and effectiveness of the Electric Reliability Council of Texas (ERCOT) as well as Sunset recommendations at ERCOT; cost-effectiveness and fairness of congestion of management mechanisms; and the adequacy of generation capacity in this state.


The roll was called at 9:08 a.m.  A quorum was present.


Chairman Fraser called the invited witnesses Paul Hudson, Chairman, Public Utility Commission (PUC) along with the Commissioners, Julie Parsely and Barry Smitherman to testify.  Chairman Hudson discussed the timeline of communication he received from ERCOT regarding the rolling blackouts.  Chairman Hudson also discussed the preliminary findings of the investigation the PUC did per the request of Chairman Fraser.  In the preliminary conclusions Chairman Hudson testified that while operational decisions by ERCOT were commendable and the emergency procedures and implementation served to achieve the precise purpose for which they were created, notice of the emergency to some market participants, the PUC, state and local leadership, and the general public was inadequate.  Chairman Hudson also stated that the PUC would perform a comprehensive and thorough review and analysis of events on April 17th.  Commissioner Parsely and Commissioner Smitherman also testified and responded to members' questions.  


At 10:42 a.m. Chairman Fraser moved that the committee stand at ease until 11:05 a.m.; without objection, it was so ordered.


At 11:22 a.m. the committee reconvened.


Chairman Fraser called the next invited witness Tom Schrader, President and CEO, ERCOT to tesify.  The Chairman also called Mark Armentrout, Board Chair, ERCOT, and Sam Jones, Executive Vice President and COO, ERCOT to testify and respond to members' questions.  Mr. Schrader testified on the sequence of events on April 17, 2006 and communication improvements ERCOT is implementing.  During the testimony of Mr. Schrader, Chairman Hudson was called again to testify and respond to members' questions.


There being no further business, at 12:33 p.m. Chairman Fraser moved that the Committee stand recessed subject to the call of the chairman.  Without objection, it was so ordered.








Senator Troy Fraser,  Chairman





Tatum Baker, Clerk