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Public Utility Commission of Texas Chairman Donna Nelson (’86) Delivers Energy Lecture

March 2015

ELLS - Donna Nelson

Donna Nelson (’86), chairman of the Public Utility Commission of Texas based in Austin, was the fifth guest speaker in the law school’s new Energy Law Lecture Series on March 2. She presented “Power, the EPA, and Texas.”

Nelson was appointed to the Public Utility Commission in 2008 by then-Governor Rick Perry and was named chairman in 2011. Before her appointment, she served as special assistant and advisor to Governor Perry on energy and telecommunication issues, as director of the Public Utility Commission’s telecommunications section, and as a legal advisor to the Public Utility Commission chairman.

“Texas’s electric market is envied by people throughout the U.S. and world, thanks to legislation in 1999 that deregulated generation, transmission, and retail providers,” said Nelson. “When the market was regulated, consumers assumed the risk instead of providers. Our current competitive market flipped that equation.”

The PUC oversees the Electric Reliability Council of Texas (ERCOT), a nonprofit organization that operates the electric grid for most of the state. “ERCOT has the unenviable job of matching supply and demand at every moment in time,” she said. “If they fail, the grid goes down and we are left without power for days or weeks at a time. When the wind does not blow or the sun does not shine, ERCOT ensures that natural gas and other fossil fuels fill the gap.”

Nelson addressed an Environmental Protection Agency rule, published in June 2014, to regulate carbon emissions under the Clean Air Act. The PUC, along with the Texas Railroad Commission and Texas Commission on Environmental Quality, filed comments last December warning that the rule could retire nearly half of the state’s existing coal capacity and jeopardize the grid’s reliability. The EPA is expected to finalize its rule this summer and require states’ compliance by 2020.

“This is a very aggressive timeline that is impossible to meet,” cautioned Nelson. “It takes years to build new power plants, and even longer to build transmission lines. Rebuilding transmission lines to handle additional wind and solar power will take a minimum of five to seven years, which puts us past the compliance deadline. The rule also ignores the fundamental jurisdictional divide between states and the federal government.”

Nelson also explained why the rule, which gave every state a different renewable energy requirement, disproportionately impacts Texas. “Texas is expected to increase its renewable energy capacity by 153%, which is greater than 29 other states combined,” she said. “This will put more renewable resources on the grid than we have demand for in the spring and fall, and will skyrocket costs anywhere from $10-18 per megawatt hour to $35 per megawatt hour.”

She concluded that while she is not opposed to renewable energy, she is opposed to the mandated redistribution of resources. “The question becomes, ‘Is this the best way?’ It’s not, because the EPA is usurping the states’ rights to control their own markets. I think all resources have a place in the market, but if you subsidize one resource, it’s not a real, competitive market.”

View the webcast here and contact for 1 hour Texas CLE credit.

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