WEBVTT
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The feed for
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I'll be serving as
the meeting moderator
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for today's conference.
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Just a few reminders,
when it is your time to speak
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you'll be transferred from over to video
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the speaker and audience
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may experience a moment of delay.
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Speakers will also
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and remove themselves from mute
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Commission does reserve the right
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to remove any audio
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for any person needed.
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Chairman Craddick, we are
ready to begin when you are.
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Good morning,
thank you, Callie.
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This is Christie Craddick.
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This meeting of The
Rural Commission of Texas
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will come to order to consider matters
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which have been duly posted,
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with the secretary
state for March 9 2021.
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Under our public participation policy,
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anyone desiring to
offer public testimony
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on any items that are not
noticed on today's agenda
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was required to register in advance.
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We did not have anyone
register in advance.
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The Commission will consider the items
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on the agenda as posted on the agenda.
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Let's go to item number one.
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Thank you.
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John Dodson will be
presenting agenda item one,
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John, we are ready when you are.
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Good morning chairman
and Commissioners.
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I'm Administrative Law Judge John Dotson
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with the Hearings division.
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Agenda item one, GUD number 10597,
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is a complaint and
request for interconnection
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filed by Vopak Moda Houston or VMH,
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against Magellan Crude
Oil Pipeline Company.
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VMH is in the process of
planning and developing
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a deep water crude
storage and terminal facility
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on the Houston Ship Channel.
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In addition to operating
storage tanks and docks,
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VMH also plans to construct side-by-side
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inbound and outbound pipelines,
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that will connect its
plans storage facility,
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with Magellan's nearby
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crude oil distribution system, the HDS.
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Which is located roughly 5.7 miles away.
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In this docket, VMH asked
the Commission to compel
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an interconnection with Magellan.
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By ordering Magellan to install
a new connection equipment
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at its nearby HDS facility, to
make possible a connection
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with VMH's planned, yet
unbuild pipeline segments.
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As well as establishing
our connection terms.
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VMH argues that it's requested
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interconnection
technically is very simple.
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It would cost Magellan nothing,
and would benefit the public
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by adding a new crude storage
facility in the Houston area.
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Something that VMH argues
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will alleviate market congestion costs.
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Magellan opposes the VMH's request
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highlighting that the
Commission has never ordered
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a connection to an unbuilt pipeline.
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And that as things currently are,
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VMH does not have
customers or completed facilities.
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The first amended PFD
was issued on January 29th,
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and both VMH and
Magellan filed exceptions.
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Consistent with the first amended PFD,
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the recommendation is
to deny VMH's request.
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I'm available for questions
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Commissioners,
we also have Richard Hall
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representing Vopak Moda Houston,
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LC, Bill Johnson and James
Mann are also registered
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representing Magellan
Crude Oil Pipeline Company.
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And all are available for questions.
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Thank you, Callie.
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Are there any questions
of our witnesses?
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Madam chairman,
Yes sir.
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I just have a comment,
that I'd like to make on this.
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This was a unusual case,
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a close case for me to consider.
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The law gives the
Commission the authority
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to order a connection,
if a necessity exists.
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However, the law doesn't
define what a necessity is.
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While it seems a necessity
would exist, in this case,
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if Vopak had completed the project,
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and Magellan was refusing a connection.
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That's not what's happening here.
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The project has not been started.
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So we are dealing with hypotheticals.
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How necessary is car
insurance, if you don't have a car?
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How necessary is a connection order,
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if there's nothing to.
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Well I understand the
company's desire for certainty,
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before spending millions
of dollars on a project.
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I do not think a connection order
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is appropriate in this case,
as things currently stand.
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Unless something significant changes,
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my hope that has a common carrier,
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Magellan does the right
thing when it comes time.
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So that neither party must go through
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an entirely new hearing process,
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unnecessarily using up
our hearing staff's time.
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All that commentary aside,
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I have one question for Judge Dodson.
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Judge Dodson, in your opinion,
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why is the contingent
order not appropriate,
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under the law at this time?
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Especially given that
you said in your PDF,
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quote, everything Vopak
asked the Commission to do
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is already required
under existing Texas law.
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Thank you Commissioner.
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So as the PFD, we kind of walked through
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whether or not Magellan
has any legal duties right now.
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And for me, that is the
big issue in this case.
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Whether or not Magellan has a duty.
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And if yes, whether
they're violating that duty.
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And we come down with,
they don't have a duty right now
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for some of the reasons
that you just mentioned.
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The facilities are not built,
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the pipelines are not built yet.
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So a contingent order,
how that would look, I think
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would just be to compel,
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to order Magellan to do something,
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even though it hasn't
yet done anything wrong.
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Vopak has been, these companies
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have been working and
negotiating for years right now.
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So Vopak in their
experience with Magellan,
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they may expect something
out of Magellan in a few years,
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whenever they build this.
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Or they may they may think Magellan
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is going to act a certain way.
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But as the regulator, the
Commission shouldn't guess
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or expected Magellan is going to
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break its duties in the future.
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It should have the
opportunity to meet its duties,
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and to comply with the
law whenever that happens.
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So that's why I don't think
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a contingency order
right now is appropriate sir.
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Thank you.
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Chairman, I'd like to say
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I agree with Commissioner Christian.
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And what I hope we've
made clear today is that
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these connections are vital to Texas,
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as it equates to
transporting and exporting
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our natural resources.
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It is my understanding that if when,
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the project is completed,
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Magellan will be compelled
to do what is best for Texas.
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And that would be
providing a connection.
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Which is what I'm assuming
that you're saying here,
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Mr. Dodson.
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And do you have
any comment back?
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Is that kinda your, perception is like
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if they come back in for a hearing.
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I apologize Commissioner,
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I had some noise beside my window.
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Yes, sir, that is what the PFD says.
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That's my view of the law also.
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Is that the Magellan at
some point, very likely
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will have some very hard
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and very straightforward
duties to interconnect.
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Not now, there's no facilities,
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but if VMH decides to
go forward with it's project
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and do what it needs to do,
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sure the companies
want their assurances,
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before they green light a
very expensive project but
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the existing laws that are on the books,
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as we say in the PFD,
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in my view will give
VMH all those assurances.
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But a VMH has to finish their facility,
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but once they do, yes sir,
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I do think that Magellan is
going to have to go ahead
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and make due a interconnection.
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Thank you.
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I've heard it.
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I just want to make a
statement that Richard Howe
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has raised his hand to make a comment,
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but that you, it's up to you
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if that wants to be heard at this time.
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Thank you.
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Do you have any questions
of the parties specifically?
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I do not chairman.
Okay.
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Any other questions of John?
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All right, thank you John
for your work on this.
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I move we approve the
examiner's recommendation.
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Is there a second?
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Second.
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Second by
Commissioner Christian.
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All those in favor say aye.
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Aye.
Aye.
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Motion passes, the items are approved.
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Thanks John.
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All right, Callie number two and three,
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I think at the same time please.
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Yes, you are correct.
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Thank you, Veronica Roberto.
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Presenting agenda items two and three.
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Veronica, we are ready when you are.
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Good morning
Chairman Commissioners.
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For the record, Veronica Roberto,
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Administrative Law Judge
with the Hearings division.
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Item number two.
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Is the application by San
Miguel Electric Cooperative Inc.
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Requesting a release of phase
two reclamation obligations,
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on an aggregate 306.2 acres,
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within San Miguel area sea mine.
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Permit number 52A
located in Atascosa County.
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The approved post mine land use,
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within the subject area is pastureland.
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Evidence in the record supports that
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San Miguel has
satisfied all requirements
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for phase two release of subject area.
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The subject area is bonded,
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based on the worst case bond method.
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So there is no eligible bond reduction
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until phase three is approved.
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After notice, no comments or
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a request for a hearing were received,
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San Miguel and staff
are the only parties
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to this proceeding.
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No exceptions were filed, no
changes to the current bond
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are requested in this docket.
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It is recommended that the
request for phase two release
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of the reclamation obligations,
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for the subject area be approved,
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and San Miguel is not eligible
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to reduce the amount
of bond at this time.
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I'm available for questions.
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Thank you, are
there any questions.
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Right, I move we approve the
examiners recommendation,
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is there a second?
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Second.
Second Commissioner Wright.
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All in favor say aye.
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Aye.
Aye.
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Motion passes, items approved.
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Veronica number three please.
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Item number three,
is the application
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by the Sabine Mining Company
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requesting the release of
phase one, two, and three
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reclamation obligations, for 11.4 acres
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within South Hospital Number One Mine,
00:10:02.240 --> 00:10:06.290
permit number 33I,
located in Harrison County.
00:10:06.290 --> 00:10:09.130
The approved post mine
land use within the subject area
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is industrial commercial.
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Evidence in the record supports that
00:10:13.000 --> 00:10:14.960
Sabine has satisfied our requirements,
00:10:14.960 --> 00:10:17.917
for the various phases of
release of the subject area.
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After notice, no comments or requests
00:10:20.450 --> 00:10:21.870
for a hearing we received,
00:10:21.870 --> 00:10:25.440
Sabine and staff are the
only parties to the proceeding.
00:10:25.440 --> 00:10:28.300
No exceptions were filed, no
changes to the current bond
00:10:28.300 --> 00:10:30.560
are requested in this docket.
00:10:30.560 --> 00:10:32.440
It is recommended that the request
00:10:32.440 --> 00:10:34.720
for phase one, two and three release
00:10:34.720 --> 00:10:37.418
of reclamation obligations for
the subject area be approved.
00:10:37.418 --> 00:10:41.190
And Sabine be eligible
to reduce the bond
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for the permit by the amount
00:10:42.550 --> 00:10:45.920
that is attributable to
the subject acreage.
00:10:45.920 --> 00:10:48.300
I'm available for questions.
00:10:48.300 --> 00:10:50.377
Thank you, are
there any questions?
00:10:50.377 --> 00:10:53.080
All right, I move, we approve
the examiners recommendation.
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Is there a second?
Second.
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Second by
Commissioner Christian,
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all in favor, say aye.
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Aye.
Aye.
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Motion passes, that item is approved.
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Thank you, Veronica.
00:11:03.560 --> 00:11:06.470
Callie, if you call item
number four, please.
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Thank you.
00:11:08.052 --> 00:11:11.130
Austin Gaskamp will be
presenting agenda item four.
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Austin, we are ready when you are.
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And we still have you, there we go.
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I understand that we got
a request to pass this item.
00:11:20.970 --> 00:11:23.670
So would you like, would
everybody like it presented,
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or do we want to pass and
bring it up, the next cycle?
00:11:26.990 --> 00:11:28.370
Do y'all have an-
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I'd like to pass it if
we could Chairman,
00:11:30.750 --> 00:11:32.300
presented on the next slide.
00:11:32.300 --> 00:11:33.350
Okay, all right.
00:11:33.350 --> 00:11:34.183
Thank you Austin.
00:11:34.183 --> 00:11:35.120
We're going to pass this,
00:11:35.120 --> 00:11:37.350
and we'll see you at a later conference.
00:11:37.350 --> 00:11:39.060
Thank you very much.
Thank you.
00:11:40.090 --> 00:11:44.090
Items five through 42, Callie.
00:11:44.090 --> 00:11:45.810
Thank you.
00:11:45.810 --> 00:11:47.660
Robert Vusick, will be presenting
00:11:47.660 --> 00:11:50.850
agenda items five through 42.
00:11:50.850 --> 00:11:52.813
Robert, we are ready when you are.
00:11:55.870 --> 00:11:58.050
Good morning, chairman
and Commissioners.
00:11:58.050 --> 00:12:00.150
My name is Robert Vusick,
technical and examiner
00:12:00.150 --> 00:12:02.650
for the Hearings
division out of numbers,
00:12:02.650 --> 00:12:05.299
Items number five through
42 are applications from
00:12:05.299 --> 00:12:08.150
Capitan Energy
Incorporated for Statewide
00:12:08.150 --> 00:12:11.970
roll 32 exceptions,
associated with various Wells
00:12:11.970 --> 00:12:14.320
in the Ford West Wolfcamp Field,
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Culberson and Reeves counties Texas.
00:12:17.310 --> 00:12:20.150
Each of the 38 dockets,
are a single gas well,
00:12:20.150 --> 00:12:21.593
with a single flare point.
00:12:22.430 --> 00:12:25.090
Capitan is seeking a two year exception
00:12:25.090 --> 00:12:28.070
to Statewide rule 32 to flare gas.
00:12:28.070 --> 00:12:31.660
The Commission previously
granted Capitan exceptions
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to flare gas by
administrative authority,
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or by Commission final order.
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Capitan is currently selling
gas to EagleClaw Midstream,
00:12:40.810 --> 00:12:43.620
as their primary takeaway pipeline.
00:12:43.620 --> 00:12:45.820
In May 2020, EagleClaw
00:12:45.820 --> 00:12:48.700
expanded their pipeline
systems capacity,
00:12:48.700 --> 00:12:51.020
which is expected to
increase deliverability,
00:12:51.020 --> 00:12:53.413
from the subject
leases to the gas market.
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Capitan developed and
proposed their daily flare volume
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for each flare point, using seven months
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of production and flaring data,
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collected prior to the
pipeline expansion.
00:13:05.030 --> 00:13:07.840
In turn Capitan also calculated
00:13:07.840 --> 00:13:10.720
the proposed maximum
monthly flare limit,
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by multiplying the daily
flare volume by factor of five.
00:13:15.130 --> 00:13:17.580
Allowing up to five days per month,
00:13:17.580 --> 00:13:21.150
to flare gas while resolving
any equipment failure,
00:13:21.150 --> 00:13:23.583
or pipeline system upsets.
00:13:24.550 --> 00:13:26.780
Capitan's production and flaring history
00:13:26.780 --> 00:13:28.060
presented in the hearing,
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was gathered prior to
the pipeline expansion.
00:13:31.790 --> 00:13:34.770
In addition, the data does not represent
00:13:34.770 --> 00:13:37.270
the impact of the increased
take-away capacity
00:13:37.270 --> 00:13:38.853
of the EagleClaw pipeline.
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The examiners recommend an
18 month flare exception period,
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instead of the two years
proposed by Capitan.
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The 18 month exception period,
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will cover the six months before
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the EagleClaw pipeline expansion,
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and the 12 months after
the pipeline expansion.
00:13:56.050 --> 00:13:59.240
The 12 month exception
period will allow the,
00:13:59.240 --> 00:14:02.553
the 18 month exemption
period will allow the stabilized,
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will allow the pipeline to stabilize,
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so that the Commission can
more appropriately evaluate
00:14:08.261 --> 00:14:10.820
Captain's production and flaring history
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in light of increased pipeline capacity.
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Exceptions were filed,
I'm available for questions.
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Thank you Robert,
are there any questions?
00:14:20.370 --> 00:14:22.033
Actually Chairman, I
would like to just make
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a comment if I could.
Yes, sir.
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Now I'd like you,
even after that,
00:14:28.960 --> 00:14:31.590
I'd like to hear your
motion, if that's okay.
00:14:31.590 --> 00:14:34.450
First I would like to applaud
our staff on these matters
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and reducing the requested
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24 month flaring
exceptions to 18 months.
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In addition, in the
upcoming Consent Agenda,
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there are a series of matters
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which were also reduced
from 24 months to 18 months.
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I believe this is a really
good step in the right direction.
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It is important for the public to know
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that these burning exceptions,
00:14:53.270 --> 00:14:56.260
if approved are not unlimited.
00:14:56.260 --> 00:14:57.830
For instance in most,
00:14:57.830 --> 00:14:59.853
if not all of these burning exceptions,
00:14:59.853 --> 00:15:03.080
Capitan is only allowed to
Flair limited amounts of gas
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on a limited number of days,
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and only in the event of system upset,
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either by equipment or needed
by pipeline capacity issues.
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Our goal and industry's goal,
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should be to continue to
limit these circumstances.
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Finally also (indistinct) operators
00:15:18.270 --> 00:15:20.100
and midstream companies alike,
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who continually strive to improve
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the efficiency of the pipeline systems.
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So we can eliminate routine flaring,
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and get as much gas
to market as possible.
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With that chairman, I would
like to hear your motion.
00:15:32.410 --> 00:15:33.243
Thank you.
00:15:33.243 --> 00:15:35.000
Any other questions or comments?
00:15:35.000 --> 00:15:36.310
I appreciate your comments.
00:15:36.310 --> 00:15:39.080
I move that we approve the
examiners recommendation
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for items five through 42.
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Is there a second?
Second.
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Second by Commissioner Wright.
00:15:45.740 --> 00:15:47.220
All in favor say aye.
00:15:47.220 --> 00:15:48.610
Aye.
Aye.
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Motion passes, those items are approved.
00:15:50.550 --> 00:15:51.450
Thank you, Robert.
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Let's move on to the oil
and gas Consent Agenda.
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There are 12 items on the
oil and gas Consent Agenda.
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These are items 43 through 54.
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I move we approve items 43 through 54.
00:16:06.930 --> 00:16:08.890
Is there a second?
Second.
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Second by
Commissioner Christian.
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All in favor say aye.
00:16:12.251 --> 00:16:13.180
Aye.
Aye.
00:16:13.180 --> 00:16:15.580
Motion passes, those items are approved.
00:16:15.580 --> 00:16:20.580
I've got agreed enforcement
orders, items 55 through 130.
00:16:20.620 --> 00:16:23.595
There are 76 agreed enforcement orders.
00:16:23.595 --> 00:16:27.950
I move that we approve
items 55 through 130.
00:16:27.950 --> 00:16:30.189
Is there a second?
Second.
00:16:30.189 --> 00:16:32.150
Second by Commissioner Wright.
00:16:32.150 --> 00:16:34.063
All in favor say aye.
00:16:34.063 --> 00:16:35.200
Aye.
Aye.
00:16:35.200 --> 00:16:37.440
Motion passes, those items are approved.
00:16:37.440 --> 00:16:40.130
And that concludes our
hearing section matter.
00:16:40.130 --> 00:16:42.250
Will now take up administrative agenda.
00:16:42.250 --> 00:16:44.040
And this is public participation.
00:16:44.040 --> 00:16:46.400
I previously stated there's no one
00:16:46.400 --> 00:16:49.887
indicating they wish to speak
on any non-posted items.
00:16:49.887 --> 00:16:52.540
We've got no executive agenda.
00:16:52.540 --> 00:16:54.230
Is there any other comments?
00:16:54.230 --> 00:16:55.279
Oh yes, sir.
00:16:55.279 --> 00:16:57.684
I just had some
statements I'd like to make.
00:16:57.684 --> 00:17:00.053
Which are dangerous,
of course at any time.
00:17:00.990 --> 00:17:02.010
But before we close,
00:17:02.010 --> 00:17:04.740
I wanted to take a moment
to give our Chairman kudos,
00:17:04.740 --> 00:17:07.730
for testimony before the legislature.
00:17:07.730 --> 00:17:10.743
I really think you did
an excellent job of just,
00:17:13.020 --> 00:17:14.250
kudos to you.
00:17:14.250 --> 00:17:15.840
It's just was a great job.
00:17:15.840 --> 00:17:17.650
You made us proud.
00:17:17.650 --> 00:17:20.240
She was spot on, when
she stated natural gas
00:17:20.240 --> 00:17:22.930
wasn't the problem, it was the solution.
00:17:22.930 --> 00:17:25.920
While many tried to
publicize this issue,
00:17:25.920 --> 00:17:27.260
the numbers don't lie.
00:17:27.260 --> 00:17:30.890
Wind and solar combined
represented 27% of electricity
00:17:30.890 --> 00:17:35.100
before the power crisis,
10% during the crisis.
00:17:35.100 --> 00:17:39.720
Natural gas represented 38%
of electricity within the ERCOT,
00:17:39.720 --> 00:17:44.420
before the power crisis,
and 64% during the crisis.
00:17:44.420 --> 00:17:45.253
On the other hand,
00:17:45.253 --> 00:17:47.710
critics say that wind and
solar can replace natural gas
00:17:47.710 --> 00:17:49.280
to meet our energy needs,
00:17:49.280 --> 00:17:53.170
and get us to net zero
carbon emissions by 2035.
00:17:53.170 --> 00:17:56.550
But on the other hand,
when unreliables wind fail,
00:17:56.550 --> 00:17:58.040
they claimed they're not buying,
00:17:58.040 --> 00:17:59.670
because they weren't expected to perform
00:17:59.670 --> 00:18:01.770
during conditions like this.
00:18:01.770 --> 00:18:03.340
Can't have it both ways.
00:18:03.340 --> 00:18:05.790
Texas cannot afford
to come within minutes
00:18:05.790 --> 00:18:08.580
of a total electric grid
system failure ever again.
00:18:08.580 --> 00:18:10.570
And the only way to ensure this,
00:18:10.570 --> 00:18:13.980
is to prioritize reliable
energy sources.
00:18:13.980 --> 00:18:16.420
Not the unreliables.
00:18:16.420 --> 00:18:19.970
Reliables such as natural
gas, coal and nuclear.
00:18:19.970 --> 00:18:23.249
And last, I want to
apologize to the Commission
00:18:23.249 --> 00:18:26.260
for making a false statement.
00:18:26.260 --> 00:18:29.280
In the last meeting, I mentioned that
00:18:29.280 --> 00:18:32.955
I was without electricity,
00:18:32.955 --> 00:18:37.955
electricity and water,
and heat, for 90 hours.
00:18:38.730 --> 00:18:41.370
I was wrong, it was 120 hours.
00:18:41.370 --> 00:18:45.080
And by the way, I'm not
making client of this, by the way,
00:18:45.080 --> 00:18:49.150
Deep East Texas where I
live, is not in the Texas grid.
00:18:49.150 --> 00:18:50.650
So for those that say,
00:18:50.650 --> 00:18:53.830
if you weren't in the Texas
grid, you were better off,
00:18:53.830 --> 00:18:57.230
I'm sorry, at my age and appearance,
00:18:57.230 --> 00:18:59.320
I'm not a poster boy, but
if you need a poster boy
00:18:59.320 --> 00:19:03.000
for living outside the
grid, didn't do good, I'm it.
00:19:03.000 --> 00:19:04.250
Thank you.
00:19:04.250 --> 00:19:07.260
I'd like to say also
(indistinct) chairman
00:19:07.260 --> 00:19:08.800
for doing an excellent job,
00:19:08.800 --> 00:19:10.690
in front of the
legislature all that week.
00:19:10.690 --> 00:19:14.449
And I really am proud to
serve with you, thank you.
00:19:14.449 --> 00:19:15.973
Oh, thank you both.
00:19:15.973 --> 00:19:17.840
Since I'm going to
kudos to our staff too,
00:19:17.840 --> 00:19:20.280
cause they prepped us and
gave us a lot of information.
00:19:20.280 --> 00:19:23.030
And so thank you both
for your comments and,
00:19:23.030 --> 00:19:23.980
and Commissioner Christian.
00:19:23.980 --> 00:19:26.270
I think we've got a lot of educating
00:19:26.270 --> 00:19:27.610
still to do in the legislature.
00:19:27.610 --> 00:19:29.750
So I'm back over there again today.
00:19:29.750 --> 00:19:33.320
And I would hope that
everybody who's working this issue
00:19:33.320 --> 00:19:35.620
would continue to give good information.
00:19:35.620 --> 00:19:38.190
Thank you for correcting
your 90 to 120 hours.
00:19:38.190 --> 00:19:41.320
I think I had a few, a few less than you
00:19:41.320 --> 00:19:45.400
but I think we all had some
real challenges that we can now,
00:19:45.400 --> 00:19:47.770
we want to have good solutions to
00:19:47.770 --> 00:19:49.250
so we don't have to do this again.
00:19:49.250 --> 00:19:50.860
And that's what we're being asked to do,
00:19:50.860 --> 00:19:52.080
and I think we've got some ideas.
00:19:52.080 --> 00:19:55.180
So I appreciate the work that we're all,
00:19:55.180 --> 00:19:56.690
we're all doing in different parts
00:19:56.690 --> 00:19:58.440
in sectors across the state.
00:19:58.440 --> 00:20:00.320
It's going to be important to continue
00:20:00.320 --> 00:20:02.020
educating and communicating better.
00:20:02.020 --> 00:20:04.240
So thank you all for that.
00:20:04.240 --> 00:20:06.050
Anything else?
00:20:06.050 --> 00:20:07.090
All right.
00:20:07.090 --> 00:20:08.420
Hearing none, this meeting
00:20:08.420 --> 00:20:09.930
of the Rural Commission is adjourned.
00:20:09.930 --> 00:20:12.530
Thank you all, and safe week.
00:20:12.530 --> 00:20:13.363
Thank you.