HOUSTON — In a stunning turn of events on Thursday, a federal bankruptcy judge told former Public Utility Commission Chairwoman DeAnn Walker she was an “unreliable” witness and dismissed her from the stand.
Walker – forced to resign in the aftermath of last February’s winter storm – was testifying in Houston about the circumstances surrounding the decision to keep electricity prices at the $9,000 per megawatt hour price cap during that 2021 freeze, costing power companies billions of dollars.
Her testimony came during the bankruptcy trial of Waco-based Brazos Electric Cooperative, which provides electricity to about 1.5 million customers across 68 counties.
In its filings, Brazos contends that the Electric Reliability Council of Texas (ERCOT), the state’s grid operator, violated the rules of the market when it kept power prices at the emergency price of $9,000 per megawatt price cap for three and half days.
Those power prices were hundreds of times the normal cost of a megawatt hour.
Brazos owes ERCOT about $1.9 billion in unpaid bills, and they are asking U.S. Bankruptcy Judge David Jones to decide what, if any of it, the cooperative will be required to pay.
On Feb. 15, 2021, a day after the massive power outages began, the Public Utility Commission voted to set prices at the $9,000 per megawatt hour to try to encourage power generators to get their power plants up and running if they could.
In court Thursday, Walker testified that on the morning of Feb. 17, 2021, as the power outages stretched into the fourth day, she went to ERCOT’s command center in Taylor with a top aide of Gov. Greg Abbott. She said she went there at Abbott’s direction and stayed overnight.
Walker testified that there was a meeting that included the governor’s aide, then-ERCOT CEO Bill Magness and other officials. She said the governor had instructed her to do all that could be done to keep the power on.
“The people in the room were talking about how to maintain service, and not to have the demand go higher than the generation, and that would call for additional load shedding,” Walker said.
Walker said a decision was made to keep the prices at $9,000 per megawatt hour in order to stabilize the system. That hour price cap stayed in place an additional 33 hours after the ERCOT-directed load shed ended.
She said she did not consult with the other two commissioners, and did not see a need for the PUC to meet again to extend its order.
“I thought that our decision was in compliance with the order,” she said.
Judge Jones, growing increasingly agitated with Walker’s contradictory answers to questions under oath, asked how she knew keeping the $9,000 cap in place was allowed under the PUC’s order if it wasn’t discussed. She told the judge she made the decision on her own that it complied with the PUC’s existing order.
But Walker also testified that it was Magness who made the “ultimate” decision to keep the price at the $9,000 cap.
“Why would he making a decision?” the judge asked Walker. “He had to be following an order. Everything you said makes zero sense. It also makes me really question your veracity.”
A few minutes later, the judge told Walker that he saw no “purpose in simply highlighting the areas of your unreliability.”
“I will tell you I am disappointed at your conduct,” the judge told Walker. “I am disappointed at your lack of candor this morning. I am disappointed at your lack of reliability as a witness. You are excused as a witness.”
Dwayne Rickerson, ERCOT's vice president for Texas grid planning and operations, took the stand next.
He testified that the grid remained in an “unstable state” well into the week of Feb. 14, 2021. He said he believes that keeping the price at the $9,000 cap longer helped stabilize the grid.
He said the decision encouraged industrial users who had access to electricity to not use it, and provided an incentive for other power grids to send electricity through direct connections. For generators that were not able to produce electricity, it created an extraordinary incentive to get back online, Rickerson said. And, for those that were online, it encouraged them to stay online.
When Rickerson’s testimony ended, the judge thanked him for his candor and told him, “Please make sure my power stays on.”
Former PUC Commissioner Arthur D’Andrea likewise came in for some withering questions from the judge.
The judge sharply questioned the process behind the PUC’s decision-making. He asked D’Andrea how PUC commissioners could have approved the order setting the $9,000 a megawatt an hour price cap yet have little public discussion about it during their Feb. 15, 2021 meeting, during which it was approved.
Under the open meetings act, PUC commissioners are not allowed to discuss commission business outside of their meetings.
D’Andrea responded that there was not a need for much discussion because the order was not “controversial,” a contention that the judge disagreed with. The judge also pointed out that there were factual errors in the order. The order said there was 10,000 megawatts when it was actually 20,000 megawatts at that time.
At one point, D’Andrea responded, “I’m not trying to be dishonest.”
“I’m not convinced of that,” the judge replied.
At another point, D’Andrea chuckled nervously.
“I’m sorry, was there something funny about this?” the judge asked D’Andrea. He then cautioned D’Andrea’s attorney to control his witness and “make sure he understands the meaning of an oath.”
D’Andrea testified that he was surprised when he learned on the morning of Feb. 18, 2021, that a decision had been made to keep the $9,000 cap in place even though ERCOT-directed load shed had ended.
“I thought it was really crazy,” he testified.
But he said he was convinced by Magness that it was the right decision. He said Magness told him that ERCOT worried that lowering the cap would lead to industrial consumers coming back on line, which in turn could lead to the need for more outages among residential consumers.
D’Andrea testified that he believed the decision to keep the price cap in place was covered by the order. However, he acknowledged that ERCOT’s independent market monitor did not think the decision made economic sense.
Abbott appointed D'Andrea as chair after Walker’s resignation.
His tenure as chair was brief. Abbott asked him to resign after Texas Monthly obtained a recording of a meeting with Investors during which he promised to “put the weight of the commission” behind ensuring that electricity prices would not be repriced retroactively, thus protecting their windfall.
The bankruptcy trial began Tuesday. Magness, who was fired in the aftermath of February winter storm, testified Wednesday.
