MINUTES 
                                           
                      SENATE COMMITTEE ON BUSINESS & COMMERCE 
                              Friday, August 13, 2004 
                                     10:00 a.m. 
                                   Senate Chamber 
                                           
                                       ***** 
                                           
         Pursuant to a notice posted in accordance with Senate Rule  
         11.18, a joint public hearing of the Senate Committee on  
         Business & Commerce and the Senate Infrastructure Development  
         and Security Committee was held on Friday, August 13, 2004, in  
         the Senate Chamber at Austin, Texas. 
          
                                       ***** 
                                           
         MEMBERS PRESENT:                        MEMBERS ABSENT: 
         Senator Troy Fraser, Chairman           Senator Kim Brimer 
         Senator Kip Averitt, Vice Chairman      Senator Craig Estes 
         Senator Kenneth Armbrister              Senator Eddie Lucio, Jr. 
         Senator John Carona 
         Senator Mike Jackson 
         Senator Leticia Van de Putte 
                                           
                                       ***** 
                                           
         A joint hearing of the Senate Business and Commerce Committee  
         and Senate Infrastructure Development and Security Committee was  
         held.  Chairman Fraser and Chairman Staples shared presiding  
         duties. 
          
         Chairman Fraser called the Senate Business and Commerce  
         Committee to order at 10:20 a.m.  Chairman Staples called the  
         Senate Infrastructure Development and Security Committee to  
         order at 10:20 a.m.  The following business was transacted:   
          
         Chairman Staples laid out joint committee interim charge #1  
         relating to the security and stability of the Texas electric  
         system and whether a system failure in Texas could occur in a  
         manner similar to the blackout that occurred in the northeastern  
         United States.  
          
         Lieutenant Governor David Dewhurst addressed the Committee  
         regarding the joint interim charge.  He asked the Committee and  
         all lawmakers to look over current security plans,  find  
         shortfalls in the system, and make legislative recommendations for change. 
          
         Upon completion of Lieutenant Governor David Dewhurst's remarks,  
         at 10:40 a.m. Senator Averitt moved that both committees stand  
         at ease until 11:00 a.m.            
  
         At 11:14 a.m. Chairman Fraser called both committees back to  
         order.  Chairman Staples then called the first invited witness,  
         Paul Hudson, Chairman, Public Utility Commission (PUC).   
         Chairman Hudson testified on electric system reliability;  
         Electric Reliability Council of Texas (ERCOT) reliability  
         advantages and challenges; PUC's role; and lessons from the  
         Northeast blackout.   
          
         During Chairman Hudson's testimony, Chairman Staples also called  
         Robert Manning, Vice Chairman, ERCOT and Sam Jones, Chief  
         Operating Officer and Executive Vice President, ERCOT, to  
         respond to members' questions.  Mr. Manning advised that all  
         board members understand that the most critical functions at  
         ERCOT are grid security and reliability.  Mr. Jones testified  
         concerning the back-up plan in place at ERCOT in the event of a  
         system failure. 
          
         Upon completion of the above witnesses' testimony, Chairman  
         Fraser then called John Fainter, President,  Association of  
         Electric Companies of Texas, to testify and respond to members'  
         inquiries.  
          
         Following Mr. Fainter's testimony, Chairman Fraser opened public  
         testimony and asked if anyone present wished to testify; none  
         being heard, public testimony was closed. 
          
         There being no further business, at 1:14 p.m. Senator Averitt  
         moved that the Senate Business and Commerce Committee stand  
         recessed subject to the call of the Chairman.  Without  
         objection, it was so ordered. 
          
         There being no further business, at 1:14 p.m. Senator Wentworth  
         moved that the Senate Infrastructure Development and Security  
         Committee stand recessed subject to the call of the Chairman.   
         Without objection, it was so ordered. 
          
         _______________________________ 
         Senator Troy Fraser, Chairman       
          
         _______________________________ 
         Tatum Baker, Clerk