Last month the Public Utility Commission of Texas held public hearings on plans to build giant 765 kilovolt transmission lines. The controversial plan drew complaints from influential voices, including Senate Business and Commerce Chairman Charles Schwertner, who asked commissioners to deny the pending applications for the lines in a letter. Cyrus Reed sat through the roughly 15 hours of testimony, and we recorded with him the morning Schwertner’s thoughts came out.
On this week’s Energy Capital Podcast, Joshua Rhodes talks with Cyrus Reed, legislative and conservation director of the Sierra Club’s Lone Star Chapter, about what it means to run an environmental group in a state with no renewable mandate, and about nearly everything happening on the Texas grid this summer.
The rest of the conversation:
The routing fight: Reed says 765 kV is the right design and the process is the problem. Routes drawn from satellite imagery that missed homes and schools, landowners knocked out of the docket for filing a week early, a 180-day clock he says does not fit lines this long, and two potential legal paths for the PUCT: deny the applications, or remand them.
Why Texas built more renewables than the mandate states: private property rights, an energy-only market, and what the Sierra Club defends now that the renewable portfolio standard is gone.
The Lone Star Chapter’s platform for the 90th session: data center protections, distributed energy, county authority over codes and floodplains, and why Reed says the Sierra Club is “not an organization that’s been calling for bans and moratoriums.”
Why ERCOT’s batch zero study depends on the lines getting built, and what a delay does to 400 gigawatts of large load. ERCOT postponed the study three days after we recorded.
Non-disclosure agreements, mitigation fees, and community benefit agreements: why data centers keep losing the room, and what Reed’s members would accept.
Behind-the-meter gas permitted one engine at a time, when Reed says the total would trigger major source review.
The Sierra Club with Texas Oil and Gas Association against the Performance Credit Mechanism, the Green Tea Coalition, and the home builders on energy codes.
Plus: ERCOT against the Southwest Power Pool, the fear underlying the artificial intelligence backlash, and the one plank he’d pass if he could only pass one.
Chapters
00:00 – Introduction and guest background
00:46 – What it means to be an environmental group in Texas
02:50 – How property rights and an energy-only market built out renewables
06:54 – The Lone Star Chapter's platform for the 90th Legislature
08:48 – County authority, HB 40, and codes instead of bans
10:46 – How load growth, 765 kV, and data centers got tangled together
15:43 – ERCOT versus SPP, and who carries the risk
17:11 – Schwertner's letter and what the PUCT could actually do
20:47 – How a CCN works, and the 180-day clock
23:07 – A bigger grid and more oil and gas extraction
25:37 – What a fairer routing process would look like
29:18 – Batch Zero, the large load queue, and the disclosure problem
33:19 – Mitigation fees and community benefit agreements
36:02 – Behind-the-meter gas and the minor source permit threshold
38:33 – The Green Tea Coalition, unlikely allies, and the 2027 platform
Resources
People & Organizations
Joshua Rhodes (LinkedIn)
Cyrus Reed (LinkedIn)
Other Orgs Mentioned:
Company & Industry News
Lt. Gov. Dan Patrick, Texas senators call for PUC to deny 765-kV transmission line applications
Chairman calls for a halt to controversial state transmission line project
Environmental Groups Contest Texas Data Centers’ Air Pollution
Environmental groups threaten lawsuit over West Side San Antonio data centers
Books, Articles & Filings Discussed
Sierra Club Lone Star Chapter - 2027 Legislative Policy Platform
Public Utility Commission of Texas - Permian Basin Reliability Plan
Texas House Bill 5066, 88th Legislature - Bill text
ERCOT - New Batch Connection Process for Large Electricity Users
Texas Commission on Environmental Quality - Texas Emissions Reduction Plan
Related Podcasts by Energy Capital
Related Posts by Texas Energy & Power
Transcript
Joshua Rhodes: Hey everyone, and welcome to another episode of the Energy Capital Podcast. I’m really excited to have Cyrus Reed here from the Sierra Club to just talk about what it means to be an environmental group in Texas and kind of how they see what is going on right now. Cyrus has a PhD in geography from the University of Texas with a focus on water policy and the dispute over the Rio Grande Valley, Rio Grande water with Mexico. Prior to becoming the legislative and conservation director for Sierra Club’s Lone Star chapter, he served as Sierra Club’s lobbyist on energy and water quality issues during the ‘05 and ‘07 legislative sessions, and he directed the Texas Center for Policy Studies.
Cyrus Reed, welcome to the Energy Capital Podcast
Cyrus Reed: It’s a pleasure to be here.
Joshua Rhodes: I wanted to have this conversation. A lot of times on this podcast, at least for folks that I’m tuned-- that I talk to, we get real technical into, like, real details and stuff, but I wanted to kind of, like, take a little bit of a s- a step out, a little bit of a step back, start talking about kind of what environmentalism means in Texas, and then maybe we’ll get into some of the current issues right now and kind of like where Sierra Club sees that, where Cyrus sees that, if possible, these types of things. But I guess, like writ large, what does it mean to be an environmental group in Texas?
Cyrus Reed: I think it means being very flexible and being very nimble. So I work for the Sierra Club, which is a national organization. The mission is the same: explore, enjoy, protect the planet, basically, and then there’s a bunch of other things in our mission statement, but it’s basically that. So that hasn’t changed. The values haven’t changed. But how I work here in Texas is probably different than how I might work in New York and California. Texas has always been a very, call it a property rights state, one where, you know, we have a right of capture on groundwater.
Joshua Rhodes: Right.
Cyrus Reed: We have our own independent grid, as you well know, and we’ve traditionally resisted federal mandates and sometimes even money. So it means the approach, the methods, the narrative we use have to be a little different in Texas. But we are, at the end of the day, a grassroots organization. We have members, and a lot of what we’ve been trying to do in recent years is get those members more engaged at the legislature or at the Public Utility Commission so people aren’t in their own little bubbles, right?
Joshua Rhodes: Yeah.
Cyrus Reed: And they’re actually talking to other Texans about these issues ‘cause at the end of the day, there’s more that probably unites us on the environmental front than divides us. And by that, I mean, most people want clean air, clean water, affordable energy.
Joshua Rhodes: Yeah.
Cyrus Reed: And so I think there’s a lot we can do. We might not lead with the same message we would lead in California or New York, but I think the values and what we’re trying to achieve is largely the same.
Joshua Rhodes: Yeah, and so, like, it’s interesting, a lot of times when I talk to media interviews and a lot of folks are like, “Texas, you’re an oil and gas state. What are you doing with, like, you know, all these renewables?” I mean, I think of as of, like, the first half of this year, we got about a quarter of our electricity from wind and about 15% from solar. And, and you mentioned, you know- Resisting federal efforts during certain administrations to pick certain technologies or other types of things like that.
So what is it that Texas has done different that would maybe not have worked in New York or California, but we’ve still ended up with a lot of renewables?
Cyrus Reed: Well, I think part of it is that private property rights.
Joshua Rhodes: Yeah.
Cyrus Reed: The idea that people can do what they want with their land, because, and I think it’s been a benefit to us, we have an energy-only market that’s fairly competitive. I mean, I guess it’s not totally competitive, but it’s fairly competitive. It means it makes a whole lot of sense in our market, which is based on the lowest cost resources getting picked first, for private landowners to lease their land for wind, solar, and now even batteries.
And so I think because we have that system in place, we’ve been able to get to these, you know, amazing numbers. We talk about in a few years 40,000 gigawatts of wind, 40,000 gigawatts of solar. I think we’re near already 20 gigawatts of storage.
Joshua Rhodes: Right.
Cyrus Reed: My friends that work for the Sierra Club in places like New York are... You know, they’d love to see those numbers. They’re not seeing them. And so ironically, somewhat ironically, even though we don’t have the mandates some of those states do, we’re actually achieving as much or more.
Joshua Rhodes: I’ll let you take credit for it if you want to, Cyrus. I mean, that’s fine.
Cyrus Reed: I don’t know that I can take credit for that. I have been around a while, but I really didn’t start with Sierra Club until 2005. So I was involved in the RPS expansion, but I wasn’t involved in the original dereg bill. But I like to say a lot of our work has just been defending what we’ve achieved. And so even as the state has now moved away from any kind of renewable mandate, we no longer have a mandatory RPS. We’ve done away with additional transmission specifically for renewable energy like we did, you know, a few years back.
But now we’re just trying to defend that market to make sure it keeps going forward, because I would rather that we build resources, at least when they operate, don’t create air pollution, and don’t use water.
Joshua Rhodes: Yeah.
Cyrus Reed: Because we have problems with air pollution, and obviously we care about climate change as well, and we also have problems with water. So the more we can have our electrical system be carbon-free and not be a big water hog, the better for all Texans.
Joshua Rhodes: Yeah, it makes quite a bit of sense. We recently put out a podcast with John Davis, who’s a landowner kind of out in, out in West Texas. He’s got some wind on his farm. He’s also a former Texas legislator, I think around the time that you were talking, so maybe you might have interfaced with him back then.
Cyrus Reed: Yeah, I definitely know him. We know each other. Yeah, he’s a good guy.
Joshua Rhodes: Yeah, he, he talked about how Texas doesn’t have a binding r- renewable portfolio standard right now, but at one point it did, put in by, you know, the left-leaning George W. Bushes and Rick Perrys of the world, apparently. But it is interesting what, like, Texas has done since then.
Cyrus Reed: Yeah, it’s an amazing story, and we have other stories in Texas. We have an amazing program run by TCEQ, Texas Commission on Environmental Quality, called TERP, the Texas Emission Reduction-
Joshua Rhodes: Right.
Cyrus Reed: Plan. Hopefully I got the acronym right. Where we’ve used a little bit of kinda sales tax and fees here and there to put into grants that help get cleaner engines on the road, and that’s made... We still have lots of air pollution problems, but it’s made a huge difference, and we’re kind of a leader on the creation of that fund and the use of it to clean up our airports and our train stations.
Yeah, where freight comes in and out, and just the heavy diesel equipment, getting it off the road. So we have some examples in Texas of things we’ve done, usually by working with industry, you know, usually not against industry, but we have some example where we’ve achieved some great things.
Joshua Rhodes: Yeah. And so let’s, like, dig into a little bit of working with industry, working with policymakers. I mean, the Lone Star Chapter, you just released your 2027 legislative policy roadmap, you know, for the 90th legislative session. So, you know, what are the top two or three, you know, priorities in there that you see?
Cyrus Reed: I’m only laughing because I’m the person that works for the Lone Star chapter who has about 50 different ideas, and then
Joshua Rhodes: Okay.
Cyrus Reed: They have to try to rein me in. So you’re asking me two or three. I mean, what we really did is we put it into four buckets.
Joshua Rhodes: Okay.
Cyrus Reed: Clean, affordable energy, clean air and water and, you know, projections for communities, land conservation, and then really, uh, sustainable water and climate resiliency. So within those four buckets, there are lots and lots of things, but to me, given what’s happening right now, some of the most important are really protecting us from data centers, and I don’t mean because of what data centers do, I just mean because of the impacts they have on land, water, and energy use
Joshua Rhodes: Yeah.
Cyrus Reed: And potentially air pollution to the extent they use, uh, gas plants. So putting in some common sense protections for that. Like I think you do, I would really like to see our market evolve even more towards, uh, smaller stuff, so distributed energy resources I think would be really important. And then the other area that I think is very important is giving counties a little more authority on some land use issues, but also on things like building codes. Just generally-
Joshua Rhodes: Hmm.
Cyrus Reed: Having better buildings, ‘cause that’s gonna help us in all those areas. If we have better buildings, we use less energy, we use less water-
Joshua Rhodes: Yeah.
Cyrus Reed: And hopefully we don’t locate them in places that flood a lot or get a lot of hurricanes. And I think we would avoid the millions and billions of dollars that get spent after every natural disaster. So those are three things that I think are really important.
Joshua Rhodes: Okay. No, yeah, no, I, I totally with you there on the efficiency point. Efficiency was my, you know, first love getting into the energy space and in Texas. Can you pull this little thread on the local authority part? I guess when someone talks about local authority issues, the example that immediately pops into my head is, you know, back at the beginning of kinda the fracking debate when Denton tried to, I think it was Denton, tried to outlaw or outlaw fracking in the state, like came over the top of them. Is that, is that the kind of thing you’re talking about?
Cyrus Reed: Yeah. And then we were a part of that debate and, you know, I’ve sort of come around to the idea there has to be somewhat of a balance.
Joshua Rhodes: Got it.
Cyrus Reed: Right? You can’t give so much power to local government that they can’t allow any development, because that’s also going in the wrong direction. There has to be some sort of happy medium, and they’ve really pulled back on the authority of counties. The legislatures basically said, “Unless we give you specific authority, you can’t do stuff,” is basically where we are. And it started with HB 40, but they’ve gone much further through the years.
Joshua Rhodes: Okay.
Cyrus Reed: But we think on certain aspects it makes sense for counties to have more authority, and things like codes and standards. So not saying you can’t do development, but if you do development, you’ve gotta adhere to certain codes that a county could set or a local government could set. Things like impervious cover and keeping development out of flood zones. So it’s basically the idea is yes, private property rights.
Joshua Rhodes: Mm.
Cyrus Reed: You know, yes, if someone wants to develop solar or wind or storage on their land, they should be able to do so. But the county can have some authority to say, “Don’t put it right next to the river,” or, “If you’re gonna build it, use better technology to use less energy and water.” So things like that is where we see a sort of a happy medium.
Joshua Rhodes: Okay.
Cyrus Reed: We’re not an organization that’s been calling for bans and moratoriums. We’ve been calling for kind of more reasonable regulations on things like data centers or, for that matter, transmission lines, et cetera.
Joshua Rhodes: Got it. Okay. Yeah. We’ll get to some of the-- I mean, might as well go ahead and get into some of that now.
Cyrus Reed: It’s complicated.
Joshua Rhodes: It really is, ‘cause it’s like the electricity sector, you know, I’ve been talking about this for a while. I mean, there’s just so many things going on right now in terms of like load growth was already happening. We, you know, had decided we were gonna build these, these big 765 lines to electrify oil and gas operations out in the Permian and Delaware basins. That was also gonna open up some parts of the state for, you know, more resource, but for some like more solar regions and things like that. And then came along, we taught the internet how to talk and all my students how to cheat on their homework, and now AI and data centers are, you know, data centers are getting wrapped up in this like whole thing.
It’s like it, it just turbocharged everything and there’s some causation in there, but a lot of it’s correlation, but that’s hard for people to flag. It just feels like a really big mess right now that we’re all trying to swim out of here.
Cyrus Reed: Yes, and it’s been interesting for me. I was at the hearing two days ago, Senate Business and Commerce hearing, and hearing all the individuals who came to Austin, and many of them are very concerned about transmission lines, and I understand why, because some of them are actually gonna be impacted directly. But in folks’ mind, everything is causing another thing, right, as you said. So Oncor is building these transmission lines not to meet the needs of the state or the oil and gas patch. They’re really doing it, well, because they’re gonna get a return on the investment, but also because of data centers and because they want renewable energy.
And of course, Oncor is simply a transmission company. They’re-
Joshua Rhodes: Sure.
Cyrus Reed: Building a line that’s been approved by the PUC. Yeah. And you know, I can criticize Oncor about how they’re doing it and where they’re choosing to place it, all those things are true. But in people’s minds, all of these things have come together. There’s some correlation, but it makes it somewhat difficult to know how to respond when people are against data centers, transmission, and renewable energy. And our position has been more we need some reasonable regulations on all those things, but it doesn’t mean we should stop them.
Joshua Rhodes: Yeah. No, I mean, I think... Like, I get asked to go to town halls quite often actually to talk about data centers and their impacts on, like, electricity and water consumption and things like that. But I also feel this under-- We’re getting way off into the weeds here and maybe off into left field, but we’ll see if we bring it back. I also feel like there’s just this undercurrent of just, like, also what we’re building this kind of stuff for, for the AI itself. Like, a question I’ve been asked before is, like, you know, “Why would I want something to come into my, my community that’s gonna take all the energy, take all the water, and then create the thing that takes my kids’ jobs away?” Or something like that.
Like, I mean, there’s this other bit of it there too, I think, that is that folks are, right or wrong, are kind of, like, afraid of what the actual thing that the data center create is gonna do. Are you hearing anything like that either?
Cyrus Reed: Oh, all the time. And-
Joshua Rhodes: Okay.
Cyrus Reed: You know, again, there’s a kernel of truth in it. Some of these technologies could take people’s jobs, right? And so I understand the fear. And then, you know, you hear about AI being used for military applications where AI is gonna start doing decision-making instead of our soldiers or our captains. And so it is a concern that we’re creating something-
Joshua Rhodes: I feel like we’ve seen this movie before, right?
Cyrus Reed: Yeah, like we’ve seen this movie before, yeah. So I understand it. So I think taking our time a little bit and pausing some things isn’t the worst idea. I was glad when ERCOT, and again, we can debate the particulars of it, but I think the Batch Study process, I’m glad they’re doing it-
Joshua Rhodes: Okay.
Cyrus Reed: So that at least there’s a process in place-
Joshua Rhodes: Yeah
Cyrus Reed: And we’re vetting, you know, some of those large loads. And so they really have to start thinking, “Well, if I’m gonna put this money in and go through this process, is this just speculation, or am I really gonna build something that’s gonna last?” So I think getting those rules right, getting the rules right around who pays for transmission can help assure that the folks actually coming are in our benefit ultimately. So I don’t know if I answered your question, but-
Joshua Rhodes: I don’t really know if I asked a question on that one. It, there’s just a bunch of that kind of thing, uh, got that kind of thing going on. So-
Cyrus Reed: Yeah, and the other theme I was hearing the other day was almost we need to go back to not an ERCOT-wide deregulated market, but a vertically integrated regional approach. I mean, a lot of people are saying, “Why are we doing all this transmission and connecting everyone?”
Joshua Rhodes: Hmm. “
Cyrus Reed: Why not just build a bunch of local generation?” And that usually means from the folks that are saying this, gas plants-
Joshua Rhodes: Yeah.
Cyrus Reed: In the region where the demand is, and then we don’t have to worry about these things going back, back and forth. And that it is very expensive to do transmission, but it’s probably ultimately more expensive to try to do everything locally, right? So...
Joshua Rhodes: Yeah. I mean, kind of as we sit, right, I mean, one of the things that I was also keeping tabs on was, like, that’s basically SPP’s model, so the Southern Power Pool, the grid that operates, like, Oklahoma up to North Dakota above ERCOT.
Cyrus Reed: Yeah.
Joshua Rhodes: And they’re having some issues right now with, like, ERCOT just set new peak demand records and, you know, was charging batteries on net during the peak. We’ve built so much stuff. Given how that, like, it’s private companies doing it and, like, they’re taking risk in market and this, that, and the other, and I think it’s one of the reasons we have for almost 40 gigawatts of solar. And I was being asked, like, “Why doesn’t SPP have this?” I was like, “Well, but they’ve got, like, these little fiefdoms everywhere, and if you make a poor decision, then it’s on your ratepayers, and you get hauled before the Public Utility Commission or Public Service Commissions.
But in ERCOT, it’s like if someone builds a wind farm and it doesn’t work out super well for them, well, that’s on your shareholders. Tough luck, right?”
Cyrus Reed: Yeah, and if you looked at those days, the 90,000 gigawatt days, the records we hit last week, the prices were low. I mean, they were-
Joshua Rhodes: Yeah.
Cyrus Reed: 30 to $50 per megawatt hour, so they weren’t your traditional kind of peak, you know, 1,000, 2,000 type. So it’s pretty good news.
Joshua Rhodes: Totally. I mean, I think those days are gone. I mean, uh, peak demand and peak pricing in ERCOT got divorced last year or the year before because it’s the same sun that’s like heating up the buildings that’s driving the air conditioning use that makes the electricity in the solar panels. Because we can do a lot of this in West Texas too, we’ve got like a solar hour later, it really kinda helps.
So recording this on July 31st, you said you were at a, a meeting at the Capitol the other day, and I’ll put you on the spot a little bit. I’ll- if you don’t wanna talk about this, then that’s fine ‘cause you haven’t, you might not have seen it. But I just saw today a letter from Chairman Schwertner. At the end, he says, “Accordingly, I’m calling on the PUC to deny the existing CCN applications. Any reapplications need to take into consideration concerns raised during the hearing. Legislature will reform the CCN process next session.” So you were at that meeting. There’s like three paragraphs in that letter, and I just read you the last one.
I mean, so you were at the meeting. What are you hearing from this letter that just got released today as we’re recording this?
Cyrus Reed: What I’m hearing... Well, first of all, let’s not forget that we’re in an election season.
Joshua Rhodes: Fair enough.
Cyrus Reed: So there are elections in November, and there’s a, I don’t know if Schwertner’s up for election or not, but the governor is, and the lieutenant governor is, and this particular is- these two issues, data centers and transmission lines, are bipartisan issues in that particular people in those areas being affected, but also all over the state-
Joshua Rhodes: Yeah
Cyrus Reed: Are pretty pissed off that they’re seeing all of this growth. They’re seeing at least reports that electricity prices could go up a lot-
Joshua Rhodes: Yeah.
Cyrus Reed: You know, whether that’s directly caused by this or not, and at least they’re taking to social media and saying, “You know, even though I’ve been a lifelong conservative-” I’m thinking about, you know, sitting this one out or even God help us vote for a Democrat. And so I think the members are seeing this and they’re wanting to be responsive to their constituents, and a lot of
Joshua Rhodes: Yeah.
Cyrus Reed: Schwertner’s constituents were there. His area includes some of these areas that would be intersected by transmission lines.
Joshua Rhodes: Yeah.
Cyrus Reed: So I think he’s reacting to that, whether or not his letter asking the PUC to deny these CCNs, whether they can do that or not, I’m not sure. Legally, however, they could remand them. Well, they could reject them, but they could also remand them and say, “You haven’t... There’s some things that were done in this process that weren’t done correctly. There were a lot of people knocked out of the process. There was very little time for people to do things like discovery and cross-examination.” So they could say, “It was an unfair process and we wanna remand it on these particular issues.” So I think there are things the PUC could do, and it wouldn’t surprise me if some of this gets delayed.
Joshua Rhodes: Okay.
Cyrus Reed: There are also a lot of people calling for the governor to call a special session right now. That is probably unlikely to happen given we have, you know, early voting starts pretty soon-
Joshua Rhodes: Right
Cyrus Reed: In October, so it’s probably unlikely. But this would then allow the legislature to talk about this, about transmission while these projects get reconsidered or are remanded or whatever. So I’m not really surprised by it given, you know, you had 207 people who signed up to give public comments-
Joshua Rhodes: Yeah.
Cyrus Reed: Two days ago, which is pretty rare for an interim hearing. Generally at an interim hearing it’s just the suits, you know, the people who normally lobby.
Joshua Rhodes: Right.
Cyrus Reed: But at both this one and there was an earlier hearing involving data centers and on the House side, and again, data centers are water. Over 100 people came and signed up to speak at that hearing. So I think there’s general anger in rural communities who tend to, you know, vote Republican.
Joshua Rhodes: Yeah.
Cyrus Reed: And the Republican leadership is responding, and they’re almost looking for an out. I don’t think Schwertner’s letter says we shouldn’t build 765 lines or we don’t need transmission. He’s just saying, “Reject these so we can consider some reforms.”
Joshua Rhodes: Got it. Okay. Yeah, just full disclosure, I was involved in one of the dockets on one of these siting things. I think there was like 6,000 things submitted, and like, I think broke a record in terms of like, you know, the poor PUCT exchange thing. And CCN stands for Convenience Su- Con- Certificate for Convenience and Necessity, right? That’s something that, like, the Public Utility Commission has to grant the transmission service provider in order to be able to get a regulated rate of return on that asset. Is that right?
Cyrus Reed: That is correct.
Joshua Rhodes: Okay.
Cyrus Reed: Every transmission project has to go through a process. Some of them require a CCN, some don’t. The larger ones generally do.
Joshua Rhodes: Okay.
Cyrus Reed: That creates another process, and one thing the legislature did is they passed a law saying all this has to occur within 180 days, and that is probably part of the problem in these cases. The transmission lines are so long-
Joshua Rhodes: Yeah.
Cyrus Reed: And it’s so complex with multiple potential routes that I think people are having a hard time even really participating, as you noted.
Joshua Rhodes: And that was based on HB 5066, right? Like, that’s where all of that’s coming from, right?
Cyrus Reed: I can’t remember if the 180 days was in that bill or another bill, to be honest. But yes, there was legislative action that session to make all of these transmission decisions fit within 180 days. And that may be fine for a 345 line or a 69... You know it. But these are really complex, these huge lines.
Joshua Rhodes: One of the things I remember, I think was in the analysis, is like if they decided to go the 345 route instead of the 765, it was actually more lines, maybe more right away, I don’t know, more fights.
Cyrus Reed: Yeah, I mean, honestly, the Sierra Club position, I don’t know that we opined on these particular lines.
Joshua Rhodes: Sure.
Cyrus Reed: But on the whole idea was 765 actually makes more sense. It actually leads to less land degradation and more efficiency on those lines. So it does make sense.
Joshua Rhodes: Yeah.
Cyrus Reed: Then there’s the question whether this particular process was fair, and we did file some comments in one of the cases and just say, “Hey, Oncor, why didn’t you just look at going a little further north along the existing highway instead of, you know, really cutting over the San Saba River nine or 10 times?” And, you know, it’s pretty complex terrain up there.
Joshua Rhodes: Yeah.
Cyrus Reed: So I think we’re actually for 765 lines, but this probably some routing and better public input should be considered.
Joshua Rhodes: Yeah. How do you-- I mean, if you don’t wanna opine on this, that’s fine. I’m just curious, like, I mean, one of the things that I see about the Texas miracle in particular is every once in a while, like we’re willing to build big tranches of like infrastructure that allow the economic engine to run. And one of those is we built the CREZ lines not only to get wind, but that also electrified oil and gas operations. The STEP line or the 765 lines, nominally to electrify oil and gas operations, but it’s gonna unlock a lot of like solar resources and just generally overall connect the state a little better.
I mean, it seems like to me, having more that infrastructure would help like the Texas grid be cleaner, also is probably gonna mean more like oil and gas extraction, maybe for LNG exports or other types of things like that. I don’t know. How do you see threading that needle with this infrastructure?
Cyrus Reed: I’m having a hard time-
Joshua Rhodes: Yeah. Yeah, me too,
Cyrus Reed: Man ... To be honest, because like you said, what’s it for? If at the end of the day it’s for data centers and AI, and they do lead to job loss, then is that a good thing or not? But I guess I have to go with, we can’t actually totally control the future and all things being equal. Having a more efficient, bigger grid is probably better for consumers-
Joshua Rhodes: Yeah
Cyrus Reed: In terms of the cost, as long as we can get the transmission part of it worked out so it’s allocated fairly, that’s probably better for consumers.
Joshua Rhodes: Yeah.
Cyrus Reed: And then I go back to y- your first love and mine, which is efficiency, which is if at the same time we do this big stuff, we can also do things on the smaller end, make sure that consumers who want can get access to on-site solar, on-site storage, or-
Joshua Rhodes: Yeah
Cyrus Reed: Make their houses more efficient or participate in demand response. Those are ways that consumers can participate, and also hopefully that would lead to less need for really big power plants, which then can have other impacts. So I’m for the big stuff and the small stuff, and I’m not sure quite how to thread that needle.
Joshua Rhodes: Yeah.
Cyrus Reed: But at the same time, as a grassroots environmental organization, we do care about process and making sure that there’s transparency, and people who want to contest permits can do so, whether that’s an environmental permit or a CCN, that’s important to us. So it’s not that we just wanna build stuff as fast as possible with no public transparency. We want the public transparency too.
Joshua Rhodes: Okay. So for this process in particular, like what do you think that would look like, if you’re willing to opine on that?
Cyrus Reed: So one thing, and I’m really reacting to the testimony I, I heard because I wasn’t involved in these cases, is There were a lot of people who came and said their map didn’t show my residency, or their map didn’t show the school I built, or the particular kind of terrain or the karst Edwards Aquifer, Trinity Aquifer, I might be getting my words wrong, wasn’t recognized. And I think a lot of this was done aerially with satellite imagery or drones, and there wasn’t a lot of ground testing-
Joshua Rhodes: Okay.
Cyrus Reed: As they looked at these routes. So I think requiring some actually kinda truth testing on the ground is important, and maybe being a little more flexible and allowing folks like Oncor, LCRA to have a wider swath of land they can look at, so-
Joshua Rhodes: Okay
Cyrus Reed: Not necessarily always going the straightest line, but also if there are existing highways with right of ways or other infrastructure that you could easily follow and therefore you’re not degrading as much new land, I think that would be important. And then just generally making it easy for people to participate and clearer. There were people who were knocked out of this case because they filed their protest, they said, “I wanna intervene,” and maybe they put their reason for intervening at the same time, and they were actually supposed to do it, you know, a week later.
Joshua Rhodes: Oh.
Cyrus Reed: But they were knocked out because they didn’t correctly follow the procedure. So I think some general education for people, including videos maybe in some cases, not everyone reads every word, right? You know, is gonna be important.
Joshua Rhodes: Terms and conditions.
Cyrus Reed: Yeah. Maybe allowing also county governments to get more involved in the process, saying they’re... If you’re a county government official or, you know, a groundwater district, you have the ability to also opine or enter as a party, I think could be helpful, ‘cause they’re representing multiple constituents, and they’ve gotta look out for the betterment of their county as well and what, how they want it to develop. So there are some things that can be done.
Joshua Rhodes: Okay.
Cyrus Reed: The other area, you know, I think we probably share this is, making it so utilities have to look at all alternatives, and by that I mean, and I don’t know if there’s an alternative to 765, that’s a big line. But some of these distribution lines, et cetera, making sure they’re looking at non-wires alternatives. Are there things we can do on distribution or through demand response or through locating storage in certain places? Can we avoid the need for building new lines or delay them? Or can we do reconductoring or use grid-enhancing technologies? Are there... Can we put that into our process at the front end so we’re not always going for the biggest thing that we think is needed and maybe it’s not?
I don’t know if that affects the 765, but the smaller stuff, it certainly could help.
Joshua Rhodes: I’m all for wringing every single megawatt out of all the capacity and things like that that we do build. But at the end of the day, if we need to build these lines, they’ve gotta go somewhere. We’re probably not gonna make-- Not everyone’s gonna be happy.
Cyrus Reed: Not everyone’s gonna be happy.
Joshua Rhodes: Yeah.
Cyrus Reed: Yeah, but if the one that’s going through the Devils River and that area, if we could put it along I-10, that might be better. I’m gonna draw a blank on the other highway, the one that’s going from Bell County out west. There’s a highway that’s being built a little north of there. Now I can’t remember which highway it is. I mean, there are some options they could look at. It just may not be the cheapest option or the most direct, but it might avoid a lot of that land.
Joshua Rhodes: Got it.
Cyrus Reed: And people’s ranches and homesteads.
Joshua Rhodes: Okay. So he talks about, we talk about transmission lines. We’ll talk about the other favorite topic, everyone, for a minute, for, uh, data centers, the two things that unite us all now, as you mentioned. So there’s also 400, or 90% of 400 gigawatts worth of large load that’s trying to connect to the system that are data centers. It’s one of the reasons why ERCOT’s setting up this Batch Zero process, which we’ve done a couple episodes on this podcast trying to explain and trying to figure out. Well, actually, before we get to data centers, I just had a thought. Like, if the 765 stuff gets delayed, this may mess up the Batch Zero process.
Cyrus Reed: It could.
Joshua Rhodes: Yeah.
Cyrus Reed: Because if you remember that Batch Study process, the study is, I guess, just beginning, but it’s supposed to come out next spring, and it’s really pretty dependent on building these lines or them being in service by-
Joshua Rhodes: Yeah
Cyrus Reed: 2031 or whenever, right? So yeah, that could mess that up. I’m sure there’s a lot of people who work for data centers who are very nervous right now.
Joshua Rhodes: Yeah. As we’re recording this on July 31st, that letter just came out today, so we’ll see how that plays out. But yeah, I mean, you know, the Batch Zero process is supposed to end up, if the numbers are still right, like a plan to the regional transmission group at the end of 2027, and then there’s like a five or six-year build-out process, which easily crosses into the 2030, 2031, where, which, which is when a lot of these, you know, 765 lines were supposed to be in service. That’s a lot of transmission to have to take out of a study, and that probably means a lot less large load is able to make it in.
So let’s stick with that thread a little bit, though. So the process around transmission lines, the other thing that is... For the 765 lines, the data centers came later, but they’re kind of all mixed in it together now. Like, one of the things that’s really surprised me is it feels like that the data center companies are not making a very good case for their value proposition. You’ve got leadership at Anthropic saying this is gonna take a bunch of white collar work away. Things like that. Like, which is not helping, like the general angst and, and anxiety around that.
But like, I’ve been shocked at how bad those companies have been in terms of like doing PR around this. I mean, maybe they’re doing stuff in the background that I don’t know of, but like, I mean, what are you feeling from like the folks that the Sierra Club, you know, talks to about data centers?
Cyrus Reed: Yeah, I mean, one of the things that is really pissing everyone off is just the lack of information.
Joshua Rhodes: Okay.
Cyrus Reed: And so A data center comes to a town or a county, there doesn’t tend to be a lot of information about it. Sometimes the information is later leaked, or they sign a non-disclosure agreement because they’re gonna get some sort of incentive from the county or city, so they sign a non-disclosure agreement. That really pisses people off ‘cause then they’re like, “We can’t even know who the company is, where the water’s gonna come from, where the energy’s gonna come from.” And so it creates -- whether they would want it anyway, they may not want it in their community anyway, but it just creates a lot of bad PR for them and just bad practice.
And we have a lot of members, you know, we have 20,000 members in Texas, and some of them are involved in fighting data centers in their communities.
Joshua Rhodes: Yeah.
Cyrus Reed: Whether that’s in, you know, Round Rock or up in the Fort Worth area, and they’re very upset by not having basic information, and then when there are these kind of public meetings, feeling like they’re being lied to or the full truth isn’t being given to them. So yeah, I think data centers and AI companies, for whatever reason, they may not have good community relations or know how to do community relations. But there’s probably some exceptions. I saw that, you know, the gentleman from Google that works here in Texas came to the hearing and mentioned some of the investments they’re making, and I don’t know if people are excited about their data centers or not, but-
Joshua Rhodes: Yeah
Cyrus Reed: At least they’re talking to the community about, “We’re gonna make these investments. We’re gonna do this training for folks.” But I’m not seeing that from most AI or data center companies.
Joshua Rhodes: Yeah. No, I mean, I think one of the, another podcast, I think it was Energy Empire I was listening to, or one of Jigar Shah’s podcast, he’s always railing also about, like, how bad like these hyperscalers are, have been in terms of PR. And he’s basically says like, “If you’ve gotten to this point where you screwed it up this much, you just gotta start paying people off.” What he means by paying people off is like investing heavily into the community.
I mean, just tossing ideas around, like putting solar and storage at everybody’s house, so they have like backup if the grid goes down or something like, and just paying for it. I mean, just maybe getting Base Power just bankrolled in for the next few decades or whatever to like do that kind of thing.
Cyrus Reed: I mean, it’s in our legislative platform, that idea that if we truly, and the governor did his letter to the PUC and said residential rates should not go up, they should go down.
Joshua Rhodes: Yep.
Cyrus Reed: But if we’re really gonna do that, we almost have to put some sort of a mitigation, either require them to do a community benefit agreement or put some sort of a mitigation fee, and I don’t know if it’s upfront or annual, that kind of pays for the water use or the energy use or the potential increase in costs by investing directly into the community. So that may be something the legislature should look at.
Joshua Rhodes: Yeah.
Cyrus Reed: If you wanna come to Texas, not only do you have to meet these interconnection standards, you’ve gotta do some investments locally that will mitigate against your natural resource use. And that, I think, would be a way... And maybe we leave it up to them. You can either do a community benefit agreement with, with local government-
Joshua Rhodes: Yeah.
Cyrus Reed: For X amount of money, or we’ll just charge you, and we’ll put it into state agencies that do the same type of things. So that could be a way to kind of force them to come to the table to communities.
Joshua Rhodes: Yeah, to keep environmentalisms going. So more than leave no trace, you know, like leave it better than you found it.
Cyrus Reed: Yeah, leave it better. Well, not environmental, that’s just basic Boy Scouts and Girl Scouts. I don’t know if you’re involved in scouting. But yeah, it’s, you know, leave it better than you found it. But it goes back to 1892 and John Muir and trying to protect the mountains and the vi- vistas, you know. In that case, we were the original Sierra Club founders were trying to prevent all these lands from just being dammed and overtaken, and protect it in some way. I don’t know that we can do that-
Joshua Rhodes: Yeah.
Cyrus Reed: In Texas right now. I mean, we did put some money into state parks. But there’s a lot of-
Joshua Rhodes: Yeah.
Cyrus Reed: Land that is obviously gonna be impacted by this development, so we might as well try to mitigate some of it.
Joshua Rhodes: Yeah, totally. And like if you don’t have any examples off the top of your head, that’s fine. But I was like, I’m just curious, when you’re talking to your members, particularly those that are kind of pushing back against data centers or other types of things like that, I was like, do you have a feel for like, I wouldn’t use the term buy them off. Do you have a feel for what your members would say, “Oh, that’s a good deal. Okay, I can accept this because of this other thing that I’m getting”?
Cyrus Reed: I do think it’s investments in the community.
Joshua Rhodes: Okay.
Cyrus Reed: The other thing that concerns us and concerns a lot of our members is, and it probably the thing we’re most concerned about honestly from data centers, is where they’re gonna get their energy from.
Joshua Rhodes: Okay.
Cyrus Reed: And if it’s building a bunch of new gas plants, it could mean all the efforts we’ve had all the, I’d say the wins we have in decarbonizing our market-
Joshua Rhodes: Yeah.
Cyrus Reed: At least here in Texas, would start to go the other direction. And some of the talk really concerned me the other day at Business and Commerce because they were saying, “We need to put more incentives into building gas plants, or we need to require them to bring their own generation, and they need to be gas plants.” Now what that means, if we’re requiring them to bring their own generation and then that generation is not interconnected, it means that’s just gonna run full blast locally and probably pollute a lot more, and, you know, we’re involved in some lawsuits on this. But we’re seeing some data centers just put lots of small engines-
Joshua Rhodes: Yeah
Cyrus Reed: Sort of next to each other, backed by diesel generators to back up that power, and running a l- probably a lot more than they should. Frankly, they’re using kinda some loopholes to say these are minor permits when the total amount of pollution is probably would make it a major permit and would mean you would need much better control technology. So I mean, I’m pretty concerned, a lot of our members are concerned just by that, that these data centers will come-
Joshua Rhodes: Hmm.
Cyrus Reed: And have local generation that will ultimately pollute folks. We would rather they get-- invest in bring capacity by investing in things like energy efficiency programs, and if they wanna also, you know, build cleaner energy sources that feed into our grid, that helps clean up the grid, and then they’re getting some of that energy. So that would be a far better outcome from our perspective.
Joshua Rhodes: I know. It’s, it’s a sticky problem, right? ‘Cause if you don’t want local generation, if you’re wanting to build the best wind and solar resources, that means transmission. That was part of our first conversation. You know, it’s like it’s not probably a tough seat to be sitting in sometimes there when you’ve got... For you.
Cyrus Reed: It is a tough seat. You know, I gave public testimony the other day, and I told the senators who are most in favor of base load, I said- It’s probably a mistake on my part, but I said, “I don’t think the answer is more base load power, big gas plants. We need flexible generation and we need flexible demand.”
Joshua Rhodes: Yeah.
Cyrus Reed: You know, we should try to incentivize that, and that should lead to a, also a cleaner environment.
Joshua Rhodes: Got it. Okay. So maybe this question will come back to kind of what we’ve been talking about. One of my favorite stories that I sometimes tell, it involves the Sierra Club. It’s not the Texas Sierra Club, but like in Georgia, I believe, the Sierra Club and the Tea Party got together one time to form the Green Tea Coalition to push for the ability to get rooftop solar in Southern Company’s area.
I think Southern Company just gave up. They’re like, “Okay, if we got the Sierra Club on, and holding hands with like, you know, the Tea Party right now, we just cry uncle. We’re done. There’s no way we can fight that coalition.” I was curious if in kind of the world in Texas or in Texas, like if you have what you would call like some interesting coalitions that you’re willing to-
Cyrus Reed: I do. I do know the folks in Georgia that were involved in that. In fact, we... Sierra Club gave an award to the kind of the volunteer who helped lead that effort.
Joshua Rhodes: They should have, yeah.
Cyrus Reed: He’s a good old boy in Georgia, yeah, because that was so successful. Now they had a common enemy which is Southern Company. That made it probably easier. You know, we’ve seen similar on things like making permitting easier for on-site solar and storage. We’ve had some similar coalitions in Texas. I’m not sure they’ve been as high profile. But then I think the other issue just a couple years ago when they did the PUC Sunset Bill, it was interesting for me to be on the same side as the Texas Association of Manufacturers, the Texas Chemistry Council, and TXOGA, the Texas Oil and Gas Association, and we were all saying, “Don’t change our energy-only market by adding some sort of a capacity type payment,” and that was then known as the PCM.
And so we all came together-
Joshua Rhodes: Okay.
Cyrus Reed: Worked pretty closely with leadership both in the Senate and especially the House to really push back against that idea.
Joshua Rhodes: Okay.
Cyrus Reed: And so I remember Todd Hunter stood up on the floor of the House. He had the main bill on this, on kind of energy market reforms, and he said, “I can’t believe it. I’ve got Todd Staples with TXOGA and Cyrus Reed with the Sierra Club on the same page supporting my bill.” He said, “I had to reread the bill just to make sure I was still for it.” But the point was, we were both against increasing cost to give extra payments to generators
Joshua Rhodes: Yeah.
Cyrus Reed: In this case gas generators, not because TXOGA’s anti-gas. They aren’t. They’re pro-gas, but because they’re pro cheap electricity, and so that’s an area where we did that. And we had a similar, uh, deal last session. We worked with the Home Builders and again, the Texas Chemistry Council to pass a bill. Now, the bill doesn’t do much. It just says SECO, the State Energy Conservation Office, should look at the latest energy conservation codes for new construction and consider whether to adopt them ‘cause they’ve been stuck, frankly, on standards that are 10 years old.
Joshua Rhodes: Yeah.
Cyrus Reed: And so we’re still waiting for the rulemaking, but it was a nice moment where the builders, the folks who make the products like insulation, the builders in the Sierra Club all said, “We at least need SECO to look at this and raise the standards on new construction in Texas,” because that should ultimately, again, save consumers money and also to help sell those more efficient products. You know, we’ll see if they actually adopt those codes, but that’s an area. So sort of unlikely allies.
Joshua Rhodes: Yeah.
Cyrus Reed: But I do think there’s a lot more we can do with conservatives on the idea of energy independence and being able to do what you want in your own home or on your own property-
Joshua Rhodes: Yeah.
Cyrus Reed: Be that on-site or even large scale solar and wind and storage. There’s more to be done there.
Joshua Rhodes: Awesome. Last question. We’re coming into an odd year, so you know, it’s always odd when the, uh, Texas Legislature meets, but we’re coming into an odd year. So, you know, if you could get one plank of your 27 platform enacted and had to sacrifice the rest, like which one would it be?
Cyrus Reed: One is hard.
Joshua Rhodes: I’ll give you a couple. Okay.
Cyrus Reed: Okay, I’ll do two. I think one is that mitigation fee idea.
Joshua Rhodes: Okay.
Cyrus Reed: The idea if data centers are gonna come, let’s make sure they invest in the local community. I think that would go a long, a long way. The second is, and this is something you’ll like, again, if we can get a real... You know, right now we’ve got, I’ll say, a small market and aggregated distributed energy resources. If we could really make that big-
Joshua Rhodes: Yeah.
Cyrus Reed: And enable a lot more consumers to get involved, I think that will help on all these things. It’ll mean less need for transmission, it will mean we’ll have a cleaner energy grid, and it will make ultimately everything cheaper for consumers. So I think those two things are what I’d like to see.
Joshua Rhodes: Awesome. I think that’s a good place to stop. Cyrus Reed, thank you for coming on the “Energy Capital Podcast.”
Cyrus Reed: Appreciate it.
