Generation was not the problem, it was transmission. What good is a generator going to do if you can't transmit the power?

This is not a defense of CP, just reality.

I think it more ties to them making capital investments in worthless sheeit as a KPI vs. spending money on non-targeted programs like trimming trees. Incentives and KPIs should be tagged to uptime, and any project or investment to increase uptime should be incentivized and/or encouraged.

This is the generator manufacturer kicking back to execs at centerpoint and the law makers that found the way to fund this. Let no opportunity slip.

Sea Speed said:

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Generation was not the problem, it was transmission. What good is a generator going to do if you can't transmit the power?

This is not a defense of CP, just reality.

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If you read the article or watched any of the hearing, the criticism was not about the generators not being used, it was that centerpoint went way deeper into mobile generation post-Uri than any other utility (500MW vs 11MW of next largest IIRC). On top of that, they went with the smaller company, and the bid was 50% higher than the larger company.

Reason being is they get their guaranteed rate of return return from the PUC on capital projects, not on maintenance costs. So they overbought and overpaid on generators.

ETA: Oh and the PUC blithely rubber stamped it all despite a judge denying the spend.

The last part of your post is being overlooked and, although they deserve it, the politicians are vilifying CenterPoint and completely ignoring the failure of the regulators.

The incentive for the utility to max out capex is supposed to be offset by the regulators oversight. Centerpoint couldn't have purchased the mobile generation and put it into rate base without approval from PUCT. More than likely a politician outside of Centerpoint wanted the mobile generation purchases to happen.

PUCT need their feet held to the fire as well and that hasn't happened yet.

The regulatory construct clearly incentives Centerpoint to buy mobile generation instead of trimming trees along transmission and major distribution lines, but the regulator is supposed to be the substitute for the market to offset that. Frankly I think placing a 0 allowable return on opex is a mistake that needs to be corrected, but I doubt it ever will be. Sometimes additional opex is much more cost efficient than a large capital project or purchase.

A quick example- on premises hosting of things like an outage map are capex. A cloud hosting provider is opex. No wonder CenterPoint tried their best to host their own outage map instead of making the overall more efficient decision of a cloud service. The regulator simply doesn't have the resources to oversee those relatively small decisions, but they add up. Imagine what else is flying under the radar.

Finally, keep in mind the absolute disaster the city of Austin was when they had an ice storm a few years ago. They were out of power for a long time in a lot of that city (because the city government wouldn't allow tree trimming because of the environment) and also pay a lot more for T&D than we do in Houston. Electrical transmission does make sense as a natural monopoly, so there have to be decisions made between cost of oversight, regulatory construct, and rates. There is not a perfect solution but at least we don't have a municipal run utility.

Agreed, two things can be true at the same time. But I agree with you the generator issue is on the regulator. They were gift wrapped a nice excuse to say no and still pushed it through.

Lot's of neighborhoods going to get wrecked when centerpoint sends it's next crew of trimmers out. They will be taking down every tree they can.

Trees are a no-win.

A few years ago, Centerpoint removed a tree adjacent to a family member's backyard. He went ballistic. Complained for weeks. Of course, had that tree knocked out his power some day, he would have also gone ballistic, claiming that Centerpoint didn't do its job.

In my suburban community, the city is pretty good at removing/cutting back trees but people throw a fit like they are killing kittens or something.

**** em.

I walked around my block the other day and noticed that 90% of the water oaks in my neighborhood of ~60 houses are dead/dying and already shedding limbs. Every single one of them needs to be cut down - there's already been at least 10 removed since last year's drought.

Flaith said:

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I walked around my block the other day and noticed that 90% of the water oaks in my neighborhood of ~60 houses are dead/dying and already shedding limbs.

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Yeah ... somehow this weird obsession with trees has taken hold. But most older homes have too many trees that are too big -- and too close to the house, street or other structures -- and are not healthy.

We plan on removing several soon.

EclipseAg said:

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Trees are a no-win.

A few years ago, Centerpoint removed a tree adjacent to a family member's backyard. He went ballistic. Complained for weeks. Of course, had that tree knocked out his power some day, he would have also gone ballistic, claiming that Centerpoint didn't do its job.

In my suburban community, the city is pretty good at removing/cutting back trees but people throw a fit like they are killing kittens or something.

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What is amazing to me is how it is Centerpoint's responsibility to remove all of these old trees that are dying and not the home owners / property owners. I get the trimming around power lines. But a tree 20 feet away falling over and wiping out a power line isn't really something Centerpoint can manage.

Really it is a wonder to me that insurance companies don't hire someone to check that there aren't large dying trees on a property they serve. Seems like they would have a significant incentive to encourage the removal as well.

The problem is one of aligned incentives. Every company has indirect expenses that are necessary to produce their product but don't go into direct product costs. They shouldn't get a return on indirect expenses as such... they should get an incentive based on their final product (like every other company). Seems like you should do it from end product backward, not opex out.

If their product is delivered power, they need to just be paid on delivered power. If you need to wrap that in a reliability guarantee, do it. Then let them manage their capex and opex to achieve a maximum return based on their product (like every other company). If they don't provide a good product, their revenue should take a hit.

How many more incentives do you need? They are a monopoly and are guaranteed not to go out of business. That's a pretty good incentive.

They need to risk losing money if they don't do basic, non-negotiable things like vegetative management, not get a return. Carrot and stick doesn't work as well if there is no stick. Then you find yourself where we are right now, with a company that is just chasing incentives instead of running a healthy business.