AUSTIN – Lt. Gov. Dan Patrick has announced that the Texas Legislature will review all existing contracts between the state and Deloitte, following a controversy surrounding the firm’s selection process for a taxpayer-funded loan program aimed at building new power plants. The decision stems from Deloitte’s involvement in selecting a company led by a CEO previously convicted of an embezzlement scheme as a finalist for a $5 billion low-interest loan program under the Texas Energy Fund.
The Texas Energy Fund, created in response to the power grid crisis during Winter Storm Uri in 2021, offers 3% interest loans to encourage the development and improvement of gas-powered plants. However, concerns were raised when Aegle Power, led by CEO Kathleen Smith, was included as a finalist. Smith was convicted in 2017 for her role in what the Department of Justice referred to as an “embezzlement scheme.” Furthermore, NextEra, another company listed on Aegle Power’s application, revealed it was included without its knowledge or consent.
During a legislative hearing on Tuesday, Deloitte representatives faced intense scrutiny regarding their vetting process, with Lt. Gov. Patrick noting that simple research could have flagged these issues. The Public Utility Commission (PUC), responsible for overseeing the program, admitted that they placed too much trust in Deloitte and should have conducted a more thorough investigation. PUC Chair Thomas Gleeson acknowledged the agency’s shortcomings and announced that Deloitte’s contract would be reduced by 10%, amounting to over $10 million.
The PUC rejected Aegle Power’s application on September 4, but the incident has delayed the program’s rollout, sparking concerns over the PUC’s capacity to manage the project effectively. Lawmakers emphasized that while the PUC has grown since Winter Storm Uri, it may require additional resources to handle the expanded responsibilities of maintaining the state’s power grid.
Lt. Gov. Patrick emphasized that Deloitte must be held financially accountable for their errors, as their missteps have hindered the Texas Energy Fund’s progress in delivering critical energy solutions to the state.
Lt. Gov. Dan Patrick: Statement on Texas Energy Fund Advisory Committee Hearing–
AUSTIN – Lt. Gov. Dan Patrick issued this statement today following the Texas Energy Fund Advisory Committee hearing:
“The fact that Texas needs to add dispatchable power to our grid due to our growing economy is clear for all to see. Voters overwhelmingly approved the Texas Energy Fund in 2023 to accomplish that goal.
“Deloitte, the contractor hired to administer the Texas Energy Fund, allowed for a falsified application to move forward in the process. When questioned at today’s hearing, Deloitte had no believable explanation for the many troubling details they failed to uncover during their vetting process. These details could have been revealed to them by a quick Google search. Their senior partner did not even know the value of their contract with the state of Texas for this project.
“Deloitte’s failure to uncover the falsified application presented by Aegle Power, whose CEO was previously convicted of embezzlement, is outrageous, and the Public Utility Commission of Texas’ (PUC) advancement of this unvetted project is extremely troubling.
“The PUC must follow through with their demand of clawing back at least 10% of Deloitte’s contract value to account for their blunder that set back the Texas Energy Fund’s ability to help deliver more megawatts of dispatchable power in a timely fashion. Taxpayers must be protected, so the legislature will also review the state’s other existing contracts with Deloitte.
“It is of utmost importance for the PUC to quickly replace the 1,200-megawatt gap left by the fraudulent Aegle Power application with well-qualified projects, and not hold those funds for non-loan completion bonuses. Our grid needs more dispatchable power as quickly as possible, and the Texas Energy Fund loan program is the most expeditious way to get more dispatchable megawatts online. Deloitte has only slowed down this important program. They need to correct their errors now or be gone.”
