Texas’ two newest utility regulators conducted their first open meeting last week as they begin to come to grips with the amount of work in front of them.

Chair Peter Lake and Commissioner Will McAdams — appointed, approved by the state Senate and sworn in to the Public Utility Commission all last month — took some time to get acclimated to their new surroundings.

“I think it is fair to say that I’m still in shock that I am sitting at this table,” McAdams told Lake during the meeting Thursday. “Years ago, when I was a [legislative] staffer in the audience, I never thought I would be sitting in this seat nor with a caliber of a partner and colleague in yourself. I’ll do everything I can to help you and be a good partner.”

Neither McAdams nor Lake have a strong utility background, although Lake chaired the Texas Water Development Board, the state’s primary water-planning and financing agency, before he was tapped to lead the PUC. McAdams comes to the commission from the Associated Builders and Contractors of Texas lobbying group, where he was president after 10 years as an aide in the Texas Legislature.

“It’s been a big couple of weeks,” Lake said.

Before Lake enthusiastically gaveled the meeting to a close, he and McAdams reviewed the PUC’s rulemaking calendar, which is filed monthly. In the weeks ahead, they will be considering a proposal for decision on water utilities’ ratemaking, whether to make permanent electronic filing requirements that have been so effective during the COVID-19 pandemic, revising rules around generation and transmission weatherization, and reviewing electric wholesale-priced products.

That doesn’t take into account whatever legislation comes out of the Texas Capitol as a result of the February winter storm.

“We are writing a new chapter for the PUC and all our stakeholders,” Lake said. “It’s a robust list, and we have a lot of heavy lifting in front of us. It’s a challenge, but we’re eager to write the new chapter.”

In their first official action, Lake and McAdams approved publication in the Texas Register a list of proposed amendments to state law that would modify the value of the scarcity pricing mechanism’s low systemwide offer cap (LCAP). The measure changes the formula that ties the LCAP value to the natural gas price index and replaces it with a provision that allows resource owners to recover their marginal costs during scarcity conditions (51871).

The LCAP is currently set as either the greater of $2,000/MWh or $2,000/MW per hour, or 50 times the natural gas price index value as determined by ERCOT.

“We need to be able to provide certainty to the market when we can and approach these signals in a systematic way,” McAdams said. “I believe this helps smooth out over the long term some of the [price] distortions that were experienced during the winter event.”

Arthur D’Andrea approved the proposal during his short stint as PUC chair. He was the last of the PUC’s three commissioners to resign under political pressure after the storm, but he remained seated until Lake and McAdams were sworn in. (See Lawmakers Wave Through Texas PUC Appointees.)

“It’s fair to say the views of the legislature have been heard loud and clear. Hearing the discussion in the Senate, we are in alignment,” McAdams said.

Avangrid-PNM Resources Merger Approved

The commission approved a settlement agreement between parties involved in Avangrid’s $8.3 billion acquisition of PNM Resources (51547).

Avangrid, PNM subsidiary Texas-New Mexico Power (TNMP) and NM Green Holdings — Avangrid’s wholly owned subsidiary formed to merge with and into PNM — filed their settlement agreement March 30. Responding to a follow-up memo from staff, the parties clarified they understood “these regulatory commitments” to encompass every regulatory commitment applicable to TNMP and accepted revisions to “disinterested directors’” authority.

Parties to the settlement agreement included PUC staff, the Office of the Public Utility Counsel, the Cities Served by Texas-New Mexico Power Co., Walmart and various consumer groups.

Avangrid said the transaction is on track to close during the second half of the year during last week’s quarterly earnings call with financial analysts. FERC lent its approval to the deal last month, leaving only the New Mexico Public Regulation Commission and the Nuclear Regulatory Commission to weigh in. (See related story, Renewables Boost Avangrid Q1 Earnings.)

The commission also approved Wind Energy Transmission Texas’ and Oncor’s request to build, own and operate a 345-kV transmission line connecting their respective switching stations in Far West Texas (50410) and Southwestern Electric Power Co.’s application for a new 138-kV line and cut-in to Wood County Electric Cooperative in East Texas (50669).