Oil industry helped handpick members of Texas advisory group for electric grid reliability, emails show
Oil and gas industry groups had a heavy hand in choosing representatives to serve on a council intended to ensure energy and electricity operations continue during extreme weather conditions, emails provided to The Texas Tribune and confirmed by the Texas Railroad Commission show.
The council, recently formalized by the Texas Legislature in the aftermath of the power crisis earlier this year is supposed to ensure the energy and electric industries meet “high priority human needs" and “address critical infrastructure concerns" — responsibilities lawmakers assigned to it after the previous, informal group failed to ensure natural gas suppliers could transport enough fuel to power plants during the February winter storm.
The lack of fuel ultimately forced more electricity offline, lengthening the crisis for Texans, millions of whom lost power, heat and, at times, safe drinking water during the dayslong blackouts. The power outages, primarily caused by the inability of power plants to operate in the extreme cold, caused the deaths of as many as 700 people, according to a BuzzFeed analysis, and caused an estimated $86 billion to $129 billion in economic damage, according to The Perryman Group, a Texas economic firm.
In response, lawmakers beefed up the Texas Energy Reliability Council in Senate Bill 3, a sweeping piece of legislation passed in the aftermath of the storm. The overhaul included formalizing the previously loose group of industry representatives into a 25-member council with regulators to head it, requiring the council to “foster communication and planning" to ensure energy and electricity are prepared to meet Texans' needs, and assigning it a biennial report on the stability of the state's electricity supply.
The revamped council, known as TERC, is composed of electricity, energy and environmental regulators, as well as five participants each from the natural gas supply chain and the electric industry. Those industry representatives are appointed by state regulators, including the Railroad Commission.
An email provided to the Tribune shows that the Texas Oil and Gas Association, one of the most influential oil and gas industry groups in Texas, provided a list of names to the Railroad Commission's executive director for appointment to the council in August. The Railroad Commission of Texas regulates the oil and gas industry.
Two months later, all four of the industry groups' top choices were confirmed to the council by regulators.
Bob Stein, a professor of political science at Rice University and expert on political ethics, said that governments often need and want people from the industry to advise them or serve on boards because of their knowledge of the sector. But he said there should be clear distinctions between industry interests and those of regulators — and rules to ensure the lines aren't blurred.
“We have to be able to appoint people who know something about what they're regulating," Stein said. “But it's all about whose interest are we looking out for: the public or the industry? Who do we really represent?"
A spokesperson for the Railroad Commission said the agency sought assistance from “various associations" because their membership represents all aspects of the natural gas supply chain.
“We vetted recommendations for experience and conducted background checks," Andrew Keese, spokesperson for the Railroad Commission, said in a statement. “RRC believes each of the appointees represent the best mix of experiences and expertise from the natural gas industry."
Industry group went 4-for-4 with its chosen candidates
On Aug. 20, Tulsi Oberbeck, director of government and regulatory affairs for the Texas Oil and Gas Association, emailed Wei Wang, executive director of the Railroad Commission, with a list of names.
“Thank you for the work of the Commission in its efforts to implement the new TERC," Oberbeck wrote, copying several other influential oil and gas industry groups, including the Texas Pipeline Association, the Texas Independent Producers and Royalty Owners Association, and the Texas Alliance of Energy Producers.
“Collectively, we have come together to recommend the attached candidates for possible appointment to the TERC," she wrote.
The list included four “primary" candidates for each market segment position on the council (except for local gas distribution) as well as an alternate candidate.
By contrast, the Public Utility Commission of Texas — charged with appointing market representatives for the electric sector on the council — solicited applications through a public docket. Executive director Thomas Gleeson issued instructions for applicants in mid-September, requiring a letter of interest, qualifications, a resume and a letter of recommendation.
While some industry groups such as the Association of Electric Companies of Texas, a trade organization of electric companies, recommended candidates to the PUCT, not all of its recommendations were chosen, and the agency also received several self-nominations, some of whom were appointed to the council.
The Texas Oil and Gas Association, in a statement, said that the Railroad Commission asked industry groups to provide a joint recommendation for the market appointees because the groups would be best suited to make those recommendations.
“Our criteria for recommendations to the TERC were those who hold a deep understanding of the intricacies of the natural gas system," Oberbeck said through a spokesperson. She said that TXOGA and other oil and gas industry groups held a conference call to discuss recommendations for the council.
“Industry suggesting members who are most familiar with how to make this system work during dire circumstances is not only appropriate, but imperative to ensuring preparedness this winter," Oberbeck said.
The new members recommended by TXOGA and confirmed by the Railroad Commission are Jason Herrick, president of Pantera Energy, an Amarillo-based oil and gas well driller and operator; Grant Ruckel, vice president for government affairs at Energy Transfer, one of the largest natural gas pipeline companies in the U.S.; Daniel Wesson, executive vice president of operations for Diamondback Energy, Inc., an independent upstream oil and gas producer; and Graham Bacon, executive vice president and chief operating officer of Enterprise Products Partners, a large oil and gas pipeline company based in Houston.
The only gas industry representative not recommended to the Railroad Commission by TXOGA is Keith Wall, director of regulatory affairs for southern gas operations at CenterPoint Energy. Wall is on the council to represent local gas distribution companies, often owned by municipalities or electric utility companies.
Consumer advocacy groups said the Railroad Commission's process lacked transparency and fairness, and some of the appointees were affiliated with companies that profited during the winter storm, such as Energy Transfer.
“I think it's really concerning for the people of Texas that all of these financial interests are going to be sitting in a room making decisions for all of us," said Virginia Palacios, executive director of Commission Shift, a newly formed Texas environment and consumer group targeting change at the Railroad Commission. “The people who profited the most from this major disaster are going to be sitting on this [council]."
Agency leaders have ties to industry they regulate
The Railroad Commission has long been criticized for its cozy relationship with the industry it regulates, particularly due to the reported financial interests of its commissioners. Commissioner Christi Craddick and her father, Republican State Rep. Tom Craddick, R-Midland, have consistently reported financial interests in the oil and gas industry in public disclosures. The two fiercely defended the oil and gas industry's role in the February power grid crisis during public legislative hearings.
Railroad Commissioners are elected in statewide, partisan elections, and the majority of their campaigns are funded by oil and gas companies. Texas law does not impose a cap on campaign contributions for statewide office campaigns. In 2013, the Texas Sunset Commission, which evaluates how well state agencies are functioning, recommended changes to the commission's campaign limits, a point that caused a bill to overhaul the Railroad Commission to fail during that session.
A recent report by Commission Shift, the environmental and consumer group, found that Commissioner Craddick reported between $1.5 million to $1.9 million in oil and gas assets, according to an analysis of Craddick's personal disclosures in 2020, but only recused herself from two matters due to a personal or private interest in the last five years. The report found four cases in which Craddick's personal finances “seemed to intertwine with her official duties" and did not recuse herself.
In a response to the report, Commissioner Craddick said she takes state ethics laws seriously.
“My personal financial statements are fully disclosed to the letter of the law and publicly accessible," she wrote through a spokesperson. “Texas Ethics Commission laws ensure transparency of our public officials and maintain the public's trust in our ability to appropriately govern, and I take these laws seriously."
Texas has lax rules around campaign finance and conflicts of interest in government because of the oil and gas industry's influence, said Stein, the Rice professor. He compared it to New York, where similarly lax laws are a result of the highly influential finance industry.
“It's not unique and peculiar to southern states or to red states," he said. “It's peculiar to the dominant industry and economic interest in that state. And we are, as a state, very much dependent on oil and gas and energy."
The Railroad Commission is currently designing rules to designate certain natural gas facilities as “critical," a designation that would help electric utility companies avoid cutting power to important facilities during mandatory power outages, which lengthened the February blackouts.
“Critical" facilities should be able to function during weather emergencies, but some lawmakers are frustrated that natural gas companies may be able to opt out of the proposed requirements if they don't voluntarily declare themselves as “critical" infrastructure — even though the Legislature added that loophole to the legislation. The agency's deadline to adopt the rule is Dec. 1.
Disclosure: The Association of Electric Companies of Texas (AECT), CenterPoint Energy, Rice University, the Texas Alliance of Energy Producers and Texas Pipeline Association have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.
This article originally appeared in The Texas Tribune at https://www.texastribune.org/2021/10/21/texas-railroad-commission-power-grid-council/.
The Texas Tribune is a member-supported, nonpartisan newsroom informing and engaging Texans on state politics and policy. Learn more at texastribune.org.
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