Texas agency spent at least $55K to withhold info about power plant loan program, cryptocurrency mines

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Texas lawmakers were furious after an applicant to the state’s $7.2 billion loan program for natural gas power plants was accused of fraud last year.

The state agency administering the program should have Googled the applicant – and found that the CEO had been previously convicted in an “embezzlement scheme” – before choosing the project as a finalist for taxpayer-backed loans, lawmakers said.

The Texas Energy Fund process must be transparent, lawmakers said, because the Public Utility Commission of Texas was handing out billions in taxpayer dollars. And even though applications to the fund are typically confidential, there was one exception.

“Fraud doesn’t cover confidentiality, does it?” state Rep. Todd Hunter asked at a legislative hearing last fall.

“Correct,” PUC Chairman Thomas Gleeson replied.

A year later, the PUC is still fighting to prevent the agency’s records about the questionable application from being released to the public. It’s spent more than $31,000 in taxpayer funds through July to hire outside lawyers to do so, according to invoices obtained by the Houston Chronicle through a public records request.

Attorney General Ken Paxton’s office ruled that the PUC had to release those records after the Chronicle requested the documents last year. In response, the PUC sued Paxton’s office.

PUC spokesperson Ellie Breed said such appeals are “routine” to decide whether information should be released to the public. The PUC had to hire outside counsel because agencies are prohibited from representing themselves before a state court. Those contracts are approved by Paxton’s office, Breed said.

“There’s this idea that it’s a very extraordinary step, but it’s really standard practice,” she said.

But Alison Silverstein, a longtime energy consultant who advised the PUC in the late 1990s, said it’s unusual for Paxton’s office to rule against state agencies in the first place.

“(The Attorney General’s office) generally seems to be on the side of letting the people’s business be conducted in relative darkness,” Silverstein said. Given that, she’s “shocked” the PUC is pushing back.

“So much of the business that the PUC conducts is about money, and, in the case of the Texas Energy Fund, significant chunks of taxpayer money,” Silverstein said. “I’m just sort of stunned by the whole thing.”

Kamil Cook, an organizer with Public Citizen, said the consumer advocacy group believes that denial of public records requests should only be done with “extraordinary justification.”

Otherwise, “the PUC shouldn’t be spending taxpayer dollars to prevent taxpayer access to information,” he said.

Legal back-and-forth

It’s not the only request the PUC has appealed.

The agency is also withholding Texas Energy Fund documents related to a controversial Dallas-area natural gas power plant, planned next to an even more controversial Bitcoin mine. And it’s fighting to withhold information about cryptocurrency mines registered in Texas.

Combined, the PUC has spent nearly $56,000 in taxpayer money through July to hire outside lawyers to pursue these three ongoing lawsuits, according to the obtained invoices. All three cases were filed this year.

In the two Texas Energy Fund appeals, the PUC doesn’t just want to withhold the loan applications, which are supposed to be confidential by law. It’s also refusing to share discussions, evaluations and recommendations about the applications, regardless of whether those communications happened within the agency, with its contractor Deloitte or with Texas lawmakers.

The PUC’s lawyers have argued that these records are protected because they constitute policymaking. Texas law protects advice and opinions on policy matters from public disclosure “to encourage frank and open discussion,” the PUC’s lawyers wrote in their lawsuit.

Paxton’s office, however, said the contested documents consist of “general administrative and purely factual information that does not rise to the level of policymaking.”

As for the cryptocurrency mining information, which was requested by several Texas-based journalists, the PUC said that public knowledge of where such facilities are located, who owns them and how much power they use could pose a security risk.

“In the wrong hands, this information could be used by terrorists to plan attacks on Texas’ energy grid and critical infrastructure,” the PUC’s lawyers wrote in the lawsuit.

Again, Paxton’s office disagreed, writing that the PUC had “failed to demonstrate” how such information could be exploited by terrorists.

Lee Bratcher, president of the Texas Blockchain Council, said the cryptocurrency industry association “supports appropriate transparency for all electricity consumers.” But the PUC has access to intelligence on security threats that the industry and the public does not, he said.

“When those authorities warn that disclosure of certain details could expose critical infrastructure to bad actors, we believe it is prudent to respect that guidance,” Bratcher said in a statement.

Journalists, residents press for transparency 

Perhaps no Texas community is more interested in information about natural gas power plants and cryptocurrency mining than Hood County.

The county, approximately 70 miles southwest of Dallas, has been embroiled in controversy about a noisy Bitcoin mine for years. Angry residents point out that the mine is currently powered by natural gas power plants owned by Constellation Energy.

They’re fighting an expansion of that power plant complex, even though Constellation has said the newest power plant wouldn’t supply electricity to the Bitcoin mine, which is owned by another company.

Cheryl Shadden, one of the residents leading the opposition, said she’d be eager for more information about how state regulators decide to give taxpayer-funded loans to new power plants, as well as where cryptocurrency mines are located statewide. She’s aghast that the PUC has worked so hard to keep such information under wraps.

“You have your hand in my wallet, and I’m also paying to cover up all of this information?” Shadden said.

Constellation withdrew its Texas Energy Fund loan application earlier this year, but still might apply for grants from the program. The company “believes that the documents should remain protected from disclosure as the law specifically requires,” spokesperson Brett Nauman said.

Nauman added that Constellation is “committed to being a good neighbor” and is supporting efforts to address residents’ concerns about the Bitcoin mine’s noise.

The PUC has awarded $2.3 billion in state loans to natural gas power plants so far, as its lawyers continue to fight against releasing information about the Texas Energy Fund applicant accused of fraud and Constellation’s controversial project.

Usually, such lawsuits take four to five years to make their way through the court system, said Joseph Larsen, a Houston lawyer specializing in freedom of information law. The lengthy process can be convenient for government agencies, because in many cases, “delaying the information effectively kills any story,” Larsen said.

“It just effectively bottles things up,” he said.

As for the cryptocurrency mining information, journalists from the Texas Tribune, Texas Observer and other outlets who initially requested those records say having more transparency is crucial to understanding the industry’s impact.

“Cryptocurrency companies often say they help stabilize the grid, while critics say the opposite,” said Keaton Peters, energy reporter at Straight Arrows News. “The PUC data would provide impartial insight into the question of what impact crypto mining has on the grid.”

“I am not giving up on seeking this information,” Peters added.

This article originally published at Texas agency spent at least $55K to withhold info about power plant loan program, cryptocurrency mines.