Public Utility Commission releases investigative report on CenterPoint Energy’s Hurricane Beryl response

The PUC is investigating CenterPoint's preparations and response to Hurricane Beryl. The investigation, which was directed by Gov. Greg Abbott, will look into the company's emergency plans, vegetation management like tree trimming, infrastructure fortifications, and use of mobile generators. The aim? To uncover the root causes of persistent power outages in Houston and nearby areas.

The PUC must deliver a report with its findings and recommendations to the governor by Dec. 1.

At a July 25 PUC meeting, company officials outlined changes they planned to make, but PUC commissioners were critical some of those fixes weren't underway before Hurricane Beryl.

“Some of the things that I heard today are things that the company should have already been thinking about doing,” PUC Commissioner Lori Cobos said.

The PUC published an investigation on Nov. 21 looking at CenterPoint's preparations and response to Hurricane Beryl — and recommending more than a dozen improvements to the company's emergency plans, communications, vegetation management like tree trimming and infrastructure fortifications.

The investigation, requested by Gov. Greg Abbott, said that customers had trouble getting reliable information during Beryl and suggested that lawmakers could pass a law that could ensure utility customers are legally entitled to information about power restoration.

“CenterPoint's outage tracker failed before Hurricane Beryl, so customers could not get critical information,” the report said.

CenterPoint launched a new outage tracker in August.

Fallen trees caused many of the power outages during Beryl, and investigators also suggested that the PUC require utilities to establish a method for customers to report vegetation hazards.

Investigators also said the Legislature should consider increasing the maximum penalty — currently $25,000 per day — for electric service quality violations, measured by customer service and electricity reliability. The report said violations are calculated on an annual average and fines are often less than $100,000, so “it is often cheaper for [utilities] to pay annual service quality penalties than to correct issues that lead to longer and more frequent outages.”

Investigators also recommended that utilities collaborate with each other, city officials and emergency services to test their emergency systems during storm drills.

For days after the storm, CenterPoint did not offer Texans a clear timeline for when power would be restored and its power outage map was offline. That made it difficult for people to decide whether they should wait it out at their homes without air conditioning or head elsewhere. Houstonians turned to a variety of workarounds to figure out which neighborhoods had power — including using Whataburger's app to discern where the electricity was flowing.

When the CenterPoint outage map was back online, people said it was unreliable and couldn't say when they could expect the power to come back on. A week after the storm, hundreds of thousands of customers still had no power.

CenterPoint CEO Jason Wells at a state Senate hearing July 29 said the company was hiring a chief communications officer.

At the height of the outages more than 2.6 million Texas households and businesses were in the dark. At least 23 people died from the storm itself and the ensuing power outages.

Houston's vulnerability to storms is well known. Unlike a winter storm in 2021 where the energy grid struggled to meet demand, Beryl damaged the distribution infrastructure like poles and wires that bring power to homes.

Ed Hirs, an energy expert at the University of Houston, said the power outages during this storm are a product of extended neglect and underinvestment in grid infrastructure by the state and utilities.

But as people waited in the humid, sweltering heat, they looked for who to blame. Many were angered by the speed in which the company was restoring power. Elected officials began to ask why so much distribution infrastructure was damaged and why it was taking so long to fix.

“In most cases when people lose power it’s because powerlines go down, but it’s normally short lived,” said Joshua Rhodes, a research scientist at the University of Texas at Austin. In this case, he added, the response took days.

CenterPoint defended its readiness and electricity restoration pace, which was faster than it had been after previous storms. But people still wanted answers: Was the utility company prepared for the hurricane? Is it prepared for future ones? And what happened to its communications?

Texas Attorney General Ken Paxton on Aug. 12 launched a criminal investigation into the response by CenterPoint Energy after Hurricane Beryl.

The investigation will examine allegations of fraud, waste, and improper use of taxpayer-provided funds, Paxton said.

“My office is aware of concerning allegations regarding CenterPoint and how its conduct affected readiness during Hurricane Beryl, a storm that left millions of Texans without power,” Paxton said in a press release. “If the investigation uncovers unlawful activity, that activity will be met with the full force of the law.”

Following the hurricane, officials and residents criticized the company for failing to prepare adequately for the storm, communicate clearly with customers and restore power efficiently.

For days after the storm, CenterPoint did not offer Texans a clear timeline for when power would be restored and its power outage map was offline, which made it difficult for people to decide whether they should wait out the storm in their homes without air conditioning or head elsewhere.

Beryl’s damage to CenterPoint's electricity infrastructure is estimated between $1.2 billion and $1.3 billion. Those costs could be passed on to customers, who could see a 2% increase on their bills over the next 15 years.

CenterPoint Energy President and CEO Jason Wells apologized to customers and vowed to improve the company's communications and make the system more resilient during several meetings with public officials including state legislators and the Public Utilities Commission.

In a letter to Gov. Greg Abbott updated on Aug. 1, Wells said the company has nearly doubled its vegetation management workforce to 1,000 people, whose work includes trimming tree branches near power lines. CenterPoint also plans to hire a new senior leader to focus on emergency response coordination and a chief communications officer.

The company unveiled a new outage tracker on Aug. 1, following through on a deadline announced by Wells at the Public Utilities Commission meeting. CenterPoint's old tracker had been offline since May, leaving Houstonians to find alternative ways to determine which neighborhoods had electricity throughout the outages — with some turning to the Whataburger app for information on where power had been restored.

Company officials also said they were already holding small group listening sessions, brought in experts to review its emergency response and nearly doubled their vegetation management workforce. But they said they still face hurdles.

Those challenges include not having direct contact information for more than half of its customers because retail electric companies that sell power to residents and businesses maintain that data. CenterPoint officials said they would need new regulatory policy from the PUC to make it easier to get that information from the retail companies.

At a July 29 Senate committee hearing, Wells said he “made a change” to the head of the company’s electric operations division because he believed CenterPoint needed to move faster on investing in resiliency. But he warned of possible repercussions in improving if he were to answer calls that he step down.

“I think if I resign today, we lose momentum of the things that are going to have the best possible impact for the greater Houston region," he told lawmakers.

CenterPoint officials said in a July 30 call with investors the company had already boosted its spending on vegetation management by 30% in 2023. CenterPoint committed to trimming vegetation along 2,000 miles of its lines where that vegetation is at greater risk of causing damage by Aug. 31.

The company submitted a plan to Abbott detailing how it plans to protect the power supply through the rest of what is expected to be a busy hurricane season. And after meeting with Abbott on Aug. 1, CenterPoint updated its plan to describe actions it has already completed and accelerate its timeline for other improvements.

"Met with CenterPoint Energy today to discuss their proposal to better prepare for the next severe weather event," Abbott posted on social media. "The original proposal was inadequate. More must be done & faster."

The plan includes commitments to replace all poles slated for replacement — around 1,000 — with sturdier, composite versions by the end of the month, coordinate more closely with local officials in emergency response situations to better deploy temporary generators and accelerate the deployment of restoration and vegetation management crews in the wake of storms.

A special panel of 13 Texas senators — many of whom represent areas affected by Hurricane Beryl’s power outages — questioned state energy and emergency officials and the CenterPoint Energy CEO about the company’s planning and response at a July 29 hearing in Austin.

Lt. Gov. Dan Patrick formed the Senate Special Committee on Hurricane and Tropical Storm Preparedness, Recovery, and Electricity after the July outages. At their first meeting, members focused their anger on the Houston-area utility and at times passionately asked about ways it could make changes to prevent such a disaster from repeating.

The senators’ ideas included altering the structure for how utilities in the state’s main power grid — which have no competition and instead earn a profit overseen by the Public Utility Commission of Texas — make money. They also discussed lowering how much profit CenterPoint is able to make.

“I would ask the PUC: Is it time to change the formula to be more outcomes-based?” said Sen. Lois Kolkhorst, R-Brenham.

PUC Chair Thomas Gleeson later agreed: “I think we need a comprehensive look at how we fund utilities, how they prepare for storms,” he said.

Gleeson said the PUC additionally had not succeeded in making sure utilities were doing enough tree trimming.

Committee Chair Charles Schwertner, R-Georgetown, said the 2025 legislative session that begins in January could include discussions about those ideas, plus financial penalties, a smaller service territory for CenterPoint, allowing better access for tree trimming and improving standards for infrastructure construction. CenterPoint officials said during a July 30 earnings call that 60% of the vegetation it removed after Beryl came from trees that were outside of their rights-of-way, meaning the company didn't have automatic access to them prior to the storm.

At a House State Affairs committee July 31, Rep. Todd Hunter, R- Corpus Christi, led what he called a "constructive solutions-based meeting." He asked utility leaders, those invited for public testimony and lawmakers to think about what legislation needs to be proposed to help mitigate the impacts of future natural disasters.

Wells, CenterPoint's CEO, asked for more investment from the state in vegetation management. He also said utilities needed more authority to cut dangerous trees outside their right-of-way that were at risk of toppling over power lines and poles, and he requested access to the contact information of all the company's customers to better facilitate communications during emergencies. Retail electric companies that sell power to residents and businesses maintain that data. Wells said his company currently can only communicate directly only with customers who opted into sharing their information with CenterPoint itself.

Hunter asked CenterPoint and all Texas utility providers to send him solution suggestions by Aug. 14.

CenterPoint has also faced criticism for spending $800 million to lease massive generators to help in extended power outages after the 2021 winter storm. The Public Utility Commission of Texas allowed CenterPoint to increase customers’ electricity bills to pay for the generators — which are difficult to transport — and earn a profit, according to the Houston Chronicle.

The generators were not used during Hurricane Beryl, CenterPoint CEO Jason Wells told lawmakers at a Senate special committee hearing on July 29. But Wells defended the company’s investment, saying the generators were intended for a winter storm-like situation where power generators are not producing enough power, not Beryl. He added that CenterPoint had been selling other parts of the business to focus more on its Houston-area operations, especially the transmission system and substations, which Wells said performed well in the storm.

Lt. Gov. Dan Patrick, who formed the special committee to look into CenterPoint’s response, said in a press release that the Legislature intended utilities to lease small mobile generators to power critical buildings, like hospitals and cooling or warming centers — though some lawmakers at the time urged CenterPoint to move ahead with the $800 million contract of large generators. He urged the PUC to revoke its approval of CenterPoint passing the $800 million cost on to customers.

“CenterPoint violated the spirit and purpose of the legislation by leasing generators that are not truly mobile and, as they testified, have never been deployed for an emergency,” Patrick said on July 30.

After Winter Storm Uri in 2021, when nearly statewide power outages persisted for days the entire electricity grid nearly collapsed, lawmakers decided Texas needed more power to meet demand. They focused their efforts on securing power generation, or fuel that is then turned into electricity, through weatherizing existing facilities and allocating $5 billion to incentivize companies to build more gas-fueled power generators in the state.

But Beryl highlighted the need to strengthen the state’s electrical distribution infrastructure, which transmits already generated electricity to individual customers, against future storms and hurricanes. Energy experts said that could include protecting existing power lines from trees by trimming them, building robust poles out of concrete or plastic and undergrounding power lines where it makes sense.

In Texas, utilities do not compete with each other, but have designated jurisdictions that they serve. The Public Utility Commission of Texas regulates electricity and oversees utilities like CenterPoint. The PUC commissioners are appointed by Gov. Greg Abbott and their job is to review and approve rates charged by utilities, review the planning and construction of utility infrastructure like power lines and coordinate with utilities on how to prepare and respond to hurricanes or other natural disasters.

Essentially any type of infrastructure project or rate increase utilities like CenterPoint proposes needs to be greenlit by the PUC.

The PUC could punish CenterPoint with a fine for its handling of Hurricane Beryl’s outages. But when disasters strike, Ed Hirs, an energy expert at the University of Houston, said regulators typically skip the fine and rely on the expectation that “the cost of the cleanup is going to be more than enough penalty.”

He said regulators often prefer companies spend money repairing damage rather than sending it to the state as a fine. Regulators also could require CenterPoint to put money into strengthening its infrastructure.

In addition to the PUC’s oversight, utilities must also comply with rules and regulations that the Legislature writes into law.

CenterPoint has withdrawn its request to raise rates on customers to cover rising costs and keep up with the region’s growth. The company filed the rate case with the Public Utility Commission of Texas before Hurricane Beryl, but announced it was withdrawing it on Aug. 1. In a press release, the company said it would instead prioritize recovery efforts from Beryl and better prepare for future hurricanes.

“We believe any delay or distraction from this mission is unacceptable. Our company’s collective focus for the remainder of this hurricane season will be on being ready: that is our mission,” CenterPoint’s CEO Jason Wells said in the press release.

If the rate case had been approved, utility officials said the average residential bill would have increased by about $1.25, according to the company filings.

Utility companies do not make money by doing maintenance like tree trimming or hardening power lines, but by expanding infrastructure coverage, according to energy experts. But the PUC controls how much money a regulated utility like CenterPoint can make.

To make their case for a rate increase, CenterPoint officials said they now served 300,000 more customers compared to when the company last requested to change its rates in 2019. They expected both population and industrial growth to continue with a shift toward electrification and potential buildout of hydrogen production facilities.

Utility officials said in the filings that they were both expanding the system and keeping up with needed repairs. The company invested more than $6 billion in infrastructure over the past five years while also responding to “unprecedented weather conditions” including drought, winter storms and hurricanes.

“Each event had its impact on the system,” said Lynnae Wilson, senior vice president of electric business. “Drought conditions lead to dead or stressed trees that are more susceptible to high winds. Any system damage as a result of weather events in turn caused customer outages.”

The company said it spent $31.9 million on vegetation management in 2022 and increased its spending on reliability projects.

“CenterPoint Houston faces increasingly high expectations from customers in terms of more reliable service and faster restoration following outages, and from regulators and policymakers increasingly concerned with strengthening the electric grid in Texas,” Jason Ryan, executive vice president of regulatory services and government affairs, said in the March 6 filings.

On July 17, after public outrage over Beryl’s mass power outages, CenterPoint requested more time to keep working through the rate case discussions with the other parties involved. Entities such as the Houston Coalition of Cities, Texas Industrial Energy Consumers and Texas Consumer Association were already weighing in on the proposed rate hike. An administrative judge considering the proposed increase requested that parties file status reports by August 2 and every two weeks after.

CenterPoint withdrew its request for approval of a $2 billion resiliency plan on Aug. 1, saying it would file a new plan after assessing its system and focusing on the aftermath of Hurricane Beryl.

Utility companies like CenterPoint can choose to create plans to strengthen their electrical systems, according to a law that went into effect last year.

The so-called resiliency plan — if state regulators approve it — is a potential way utilities could start charging more to harden their distribution infrastructure by replacing poles or trimming more trees. In many cases, those costs would be charged to power providers that sell power, which would then likely pass the costs on to residents and businesses.

In a filing with the Securities and Exchange Commission, CenterPoint said that it was withdrawing its resiliency plan "in order to focus on addressing the impacts of Hurricane Beryl in its service territory and accelerating preparedness and resiliency efforts for the remaining storm season." The company added that it "expects to complete a broader assessment of additional system resiliency opportunities and would intend to refile a subsequent system resiliency plan."

Michael Webber, an energy resources professor at the University of Texas at Austin, said spending more up front for a stronger electric system would save money and even protect peoples’ lives and health better over the long term. That’s because there would be less damage to infrastructure after storms — and fewer people without power, too.

In its proposed resiliency plan submitted to regulators in April, Centerpoint suggested investing more than $2 billion to strengthen its poles and wires, using federal and state funding to cover some of the costs. The proposal included spending $376 million to replace wooden transmission structures with steel or concrete, and $99 million to replace or brace some 5,000 wooden distribution poles per year from 2025 to 2027.

Energy experts told The Houston Landing that CenterPoint’s proposed funding for the plan is only a fraction of what’s needed for upgrades to protect the system against bad weather. The Landing also reports that plan does not include details on where upgrades will be made and predictions on how many customers might benefit from proposals to harden the distribution infrastructure.

CenterPoint officials had said on July 25 that they would amend the plan based on their own review and regulators' review.