Responses and Solution to CenterPoint’s Failure to Deploy Mobile Generation

by Samantha Miller, Rick Arnett, and Jake Dyer

It’s been nearly a year since Hurricane Beryl tore through Houston, leaving millions of CenterPoint Energy Houston Electric, LLC (CenterPoint) customers without power during some of the hottest days of summer. The electric utility came under blistering criticism afterwards— criticism for its troubled recovery efforts, for its faulty customer communications, and, most significantly, for its failure to deploy some of its extremely expensive backup generators.

The company’s well-publicized failures after Beryl roiled Texas politics for months and prompted regulatory action. In this article we’ll look back at the steps taken by the Public Utility Commission of Texas (PUC), Electric Reliability Council of Texas (ERCOT), and the Texas Legislature relating to CenterPoint’s actions — and inactions — in response to Hurricane Beryl.

Public Utility Commission of Texas and ERCOT Response

Temporary Emergency Electric Energy Facilities, or “TEEEF,” are mobile generation units that can provide temporary power to critical facilities and end-use customers during significant power outages. The Texas Legislature opened the door to utility TEEEF leases in 2021, through the adoption of House Bill 2483 (by then Rep. Phil King), and then CenterPoint quickly took steps to lease its own TEEEF fleet — at a cost to ratepayers of approximately $800 million. The PUC approved those expensive leases in May 2023, making CenterPoint’s TEEEF program by far the most expensive in Texas.

But CenterPoint failed to deploy seven of its largest TEEEF units seven months later, during the recovery efforts for Hurricane Beryl. CenterPoint said these large 32-megawatt (MW) generators were not easily transported and so were unsuited to the task. In the meantime, millions of CenterPoint customers went without power for over a week during some of summer’s hottest days.

Soon afterwards, Gov. Greg Abbott directed the PUC to open an investigation into emergency preparedness and response by utilities in the Houston area. On November 21, 2024, the final report of the investigation found that “CenterPoint’s process for deploying mobile generation to customers was inefficient. In addition, the fleet was not right-sized for a Hurricane Beryl-type restoration event.”

Meanwhile in San Antonio, the city’s municipal utility, CPS Energy, had proposed retiring three of its natural gas generation units, designated Braunig 1, 2 and 3, by March 31 of this year. But ERCOT warned those retirements could result in significant reliability problems, such as transmission overloads and cascading outages, and so ERCOT staff proposed entering Reliability Must Run (RMR) agreements with CPS Energy. Under such agreements, ERCOT ensures the continued operations of generation resources that would otherwise retire due to economic reasons by providing those resources with additional revenue. The costs of these RMRs are ultimately borne by ERCOT consumers generally.

Before entering an RMR, ERCOT, under its protocols, must issue a Request for Proposals (RFPs) to identify more cost-effective alternatives. ERCOT issued an RFP and CenterPoint responded to it by offering its fifteen 32 MW mobile generation units free of charge for use by CPS. In theory, this would address ERCOT’s reliability concerns, would be more cost effective than an RMR, and would allow Texans to benefit from the idled TEEEF facilities. The PUC expressed support for CenterPoint’s proposal and an agreement to relocate CenterPoint’s mobile generation units to CPS Energy’s service area was finalized by ERCOT and Prime Power Solutions, LLC — the owners of the leased mobile generation units — on June 4, 2025. The mobile generation units will soon be relocated to San Antonio and will temporarily replace Braunig 1 and 2, and ERCOT will enter an RMR for Braunig 3, the youngest facility. CenterPoint will receive no revenue from the units for their time in the San Antonio area.

CenterPoint’s Ongoing TEEEF Requests

In response to the release of the mobile generation units to CPS, CenterPoint filed two TEEEF related applications with the PUC — an Application to Reduce its TEEEF Capacity and Rates (Reduction Application) and an Application for Authorization to Lease TEEEF (Lease Authorization Application).

In the Reduction Application, CenterPoint seeks the approval of (1) a solution to make fifteen 32 MW TEEEF units available to ERCOT and CPS Energy beginning on or around May 1, 2025; (2) a corresponding reduction to the capacity of CenterPoint’s TEEEF fleet; and (3) a TEEEF Rider rate reduction to reflect the removal of the fifteen 32 MW TEEEF units. CenterPoint seeks a decrease of $24,022,583 from its TEEEF revenue requirement. If this decrease is approved, CenterPoint’s TEEEF revenue requirement will be $129,180,464. CenterPoint asserts that this reduction accounts for the removal “from rates the prepaid amount attributable to the time period after the units are no longer available to serve (its) customers, so that … (its) customers will not bear the cost of the fifteen 32 MW TEEEF units attributable to that period going forward.” Varying stakeholders, including the Gulf Coast Coalition of Cities, have intervened and are evaluating the request to ensure customers are made whole for the removal of the fifteen units from CenterPoint’s TEEEF fleet.

At the same time, many of these same stakeholders are also reviewing CenterPoint’s Lease Authorization Application. In this application, CenterPoint seeks approval from the PUC to enter new TEEEF leases for smaller units (1.5 MW or less) and a finding that these leases are reasonable and necessary to aid in restoring power to the company’s distribution customers during a significant power outage that qualifies for TEEEF energization. More specifically, the lease CenterPoint is seeking is for 36 relatively small units totaling 20 MW of new TEEEF capacity. At this time, CenterPoint does not request any dollar amount related to these units but will request these costs in the future.

Although it seems unusual that CenterPoint now requests to grow its TEEEF fleet after agreeing to release multiple TEEEF units, the smaller units should result in an actual benefit to customers during a significant power outage. That’s because it’s easier for CenterPoint to move these smaller units by truck. As such, the operation of these smaller units gives CenterPoint the opportunity to provide a more rapid response during emergencies. Stakeholders and PUC staff are currently evaluating CenterPoint’s Lease Authorization Application.

Legislative Response

The 89th Regular Legislative Session began January 14, 2025, and within 18 days, on February 3, 2025, Senate Bill 231, written by Sen. Phil King, was introduced. SB 231 proposed changes to the TEEEF statute that King authored in 2021 by setting guardrails on utility TEEEF leases and deployment (as described in detail in the article Recap of Utility Law Implications from the 89th Legislative Session). It also includes language directly in response to CenterPoint’s failure to deploy its TEEEF units during Hurricane Beryl. To that end, SB 231 directs the PUC to initiate a proceeding to review the rates of transmission and distribution utilities that leased a TEEEF facility and did not deploy the facility during a significant power outage that occurred during a major disaster. If in its review the PUC determines a rate charged or cost incurred by a transmission and distribution utility to be unreasonable or not prudent, SB 231, as written, would have directed the PUC to revise the utility’s rate of return and order the utility to refund to customers any amount improperly recovered.

However, after its introduction to the Senate, the legislation was revised and the version of SB 231 that was passed by both the Senate and the House of Representatives removed the section relating to the review and possible customer refund. The guardrails for a utility’s TEEEF lease and deployment of TEEEF units remained. SB 231 was signed by Gov. Abbott on June 20, 2025, and became effective immediately. The changes to SB 231 will give the PUC more opportunity to review a utility’s TEEEF facilities and hopefully will result in more reasonably priced TEEEF fleets going forward.

Samantha Miller and Rick Arnett are Associates in the Firm’s Energy and Utility Practice Group. Jake Dyer is a Policy Analyst in the Firm’s Energy and Utility Practice Group. If you would like additional information or have questions related to this article or other energy and utility matters, please contact Samantha at 512.322.5808 or smiller@lglawfirm.com, or Rick at 512.322.5855 or rarnett@lglawfirm.com, or Jake at 512.322.5898 or jdyer@lglawfirm.com.