Dive Brief:
- Texas has opened an investigation into CenterPoint Energy’s response to Hurricane Beryl last month, including “allegations of fraud, waste, and improper use of taxpayer-provided funds,” Attorney General Ken Paxton announced Monday.
- Beryl hit Texas as a Category 1 hurricane on July 8 and left almost 2.3 million CenterPoint customers around Houston without power, some for more than a week. Mobile generation that the utility leased for $800 million, for use during emergencies, was largely ineffective in restoring power.
- The utility said Tuesday that it will cooperate with Paxton’s investigation and has already “demonstrated our absolute commitment to transparency and cooperation” by participating in post-storm hearings before the Public Utility Commission of Texas, the Senate and the House.
Dive Insight:
“My office is aware of concerning allegations regarding CenterPoint and how its conduct affected readiness during Hurricane Beryl,” Paxton said in a statement. “If the investigation uncovers unlawful activity, that activity will be met with the full force of the law.”
The attorney general’s office is responding to claims that CenterPoint’s “conduct may have resulted in significant harm to Houston residents, including rate increases, outages, and lengthy delays in restoring power during Hurricane Beryl,” the statement said.
The attorney general is not the only entity investigating utilities’ storm response. The PUCT on Monday issued requests for information to power generators, retail electric providers, CenterPoint, AEP Texas, Entergy and others. While many power providers faced widespread outages related to Beryl, CenterPoint’s territory around Houston was hardest hit.
Hurricane Beryl “made it clear that utilities have to be better prepared for natural disasters” PUCT Chairman Thomas Gleeson said. “A key step in our investigation is gathering information from utilities and impacted Texans to get a clear picture of what went wrong and where improvements need to be made.”
CenterPoint has until Aug. 30 to respond to the commission’s questions about its emergency planning and storm response, communications policies and strategies, distribution infrastructure, mobile generation and other topics.
The commission’s RFI requests mobile generation details “regarding the competitive bidding process used or the justification for not using a competitive bidding process ... the initial lease or procurement date of each facility .... [and] the expected return on investment associated with each lease or procurement.”
Lawmakers have discussed clawing back Centerpoint’s reimbursement for $800 million it spent on mobile generation following Winter Storm Uri in 2021. Most of those mobile generators were too large, however, to assist in post-Beryl recovery.
Sen. Phil King, R-District 10, supported CenterPoint’s request to recover those costs but now says the utility “deceived me, the Texas Legislature, and the Public” about the amount of money involved.
“I took the word of senior CenterPoint executives when they asked me to sign a letter in support of their reportedly $200 million investment in what they represented to be mobile generators,” King said in an Aug. 8 statement. “In retrospect, it is clear CenterPoint was angling for profits.”
According to Texas Lt. Gov. Dan Patrick, R, by leasing larger and more expensive generators which “are of little to no use in 99% of emergencies,” CenterPoint brought in “at least $30 million in profits off the backs of ratepayers.”
CenterPoint spokesperson John Sousa issued the following statement in response to questions about Paxton’s investigation:
“Since Hurricane Beryl, we have demonstrated our absolute commitment to transparency and cooperation through our participation in three separate hearings at the PUCT, the Senate, and the House. We look forward to cooperating with the Texas Attorney General or any other agency and have made clear our commitment to upholding the values of our company,” Sousa said. “We urge any party that has information concerning these issues to come forward and provide such information to us, our regulator, or the Texas Attorney General immediately.”
The utility has also launched a 30-day “Greater Houston Resiliency Initiative” that includes replacing approximately 1,000 wooden poles with stronger fiberglass poles to withstand winds up to 132 miles-per-hour, doubling its vegetation management workforce, and installing automated devices to reduce outages and improve restoration times.
“We have heard the calls for change, and we are taking action now. This first phase of our Greater Houston Resiliency Initiative will focus on a series of targeted actions to immediately strengthen our infrastructure across our communities,” CenterPoint President and CEO Jason Wells said in an Aug. 5 statement. “We know we have a lot of work to do to re-earn our customers' trust. This initiative reflects our commitment to become the most resilient coastal utility in the country.”
