title: 203. Five Years After Winter Storm Uri, a Texas Co-op Shares Its Lessons Learned
author: The POWER Podcast
contenttype: podcast
publication: The POWER Podcast
published: 2026-01-20T14:55:20
sourceurl: http://dts.podtrac.com/redirect.mp3/feeds.soundcloud.com/stream/2250856328-user-755104578-203-five-years-after-winter-storm-uri-a-texas-co-op-shares-its-lessons-learned.mp3
word_count: 4187
Hi, everyone. This is Aaron Larson, executive editor of Power Magazine, and you're listening to the Power Podcast. On today's episode, I'm joined by David Naylor. David is the president and CEO of Rayburn Electric Cooperative. So thank you for coming on the podcast with me, and please tell a little bit about yourself and about Rayburn Electric Cooperative. Thanks, Aaron. I appreciate it. I'm a recovering engineer by my trade. That's what my degree was in, but I started out at college as a consultant. I was there for 16 years, managing consultant, primarily worked with other generation transmission cooperatives like Rayburn across the United States. Rayburn was kind of mine, and they gave me an offer I couldn't refuse, so 15 years ago, I came on board as executive vice president, and then took over as the president's CEO in 2017. It's kind of hard to believe. It makes me feel older than I think I am, as far as having been in the space for about 30 years. Tom Pulas and you're having fun, right? You sure does. Rayburn is a, like I mentioned, a generation of transmission cooperatives, which from far as a cooperative is concerned, means we're owned by our members, we're not for profit organization. And so from that standpoint, the needs we do not have investors, do not have stockholders, the people who bother power from us is who also owns us. And so that's kind of a unique model to the industry, but some must have been around since the 1940s. As a generation in transmission or a G&T cooperative week, we handle the host cell side of things. We handle generation, handle our plants, obtaining the resources, power supply, wherever we're at in these as far as getting the source. And then we have the transmission, so we deliver it to our four distribution cooperative members who ultimately that take it and serve the retail consumer at the end of the lawn. We're 16 caddies east north of the Dallas Metroplex, roughly 625,000 Texans who Rayburn and our members are collectively. So very fast growing space and there has been a lot of families last few years. Looking back, the main reason I wanted to have you on the program is because we're coming up on the five year anniversary of Winter Storm Yuri, which really hit Texas hard. And I wanted to get a feeling for what has happened since then. And when you look back at that event, what stands out to you both personally and from a perspective at Rayburn and serving your customers? So personally, it's amazing how a five day period can impact and have such a fallout for so many years after the event occurred. I mean Winter Storm Yuri was five days, or at least a solid year, that was all I did. And a lot of things that we've done sets or because of Winter Storm Yuri. So I look pre-early, post-early, photos of me, I have a lot more gray hair now that I did. I'm sure. From Rayburn standpoint, Yuri is one of those events that really took us to the edge. And we really had to do a lot of self-evaluation and it became a real pivot point for Rayburn. And when I say that, where some Yuri, we occurred three years of power cost in that five day period. That's incredible to think about. You know, if my electric bill came and it was three years worth of power on my bill, I know I would freak out. I don't know what I would do to pay that bill. So continue your story. I'd love to hear what thoughts went through your mind when that happened. Yeah, I was some of them, you know, some of those I can say now, some of them are not, not worthy of it, but granted or being said. But, you know, you know, area, what she said is exactly right. And was the exact concern that we had is while we can pass those costs on to our members, after those consumers, you know, we're putting those people in a situation that, you know, some of them can, maybe can pay, but most of them are going to not be able to. And it's just, it's just untenable for, for those folks. And so for us, you know, we ended up taking a different approach. We, you know, there are a lot of options on the table. We bankruptcy is certainly one of them, not what we wanted and we're thankful we didn't have to do that. But ultimately we were able to cope with the solution where we were able to pay everything that we owed. And then the other thing we did is, you know, we really took a hard look and the mirror and said, what are some lessons learned? What do we need to do differently? And we really made some strategic decisions that ultimately shifted our entire operation standpoint as far as power splash concerned. Going from a mental owned resources to now we have a part of the resources that are building building new ones. Yeah, and I think from what I understand, you know, within two years of that storm, you actually purchased the Panda Sherman power plant, which is a 758 megawatt natural gas fired facility. What led you to make that move and why did you purchase that particular plant and who did you have to speak to or, you know, get into a room to make that decision? So coming out of Yuri, when we looked at the people who were who benefited from Yuri or at least came out of Yuri in a solid situation. And we've recognized that there it was the people who owned generation assets. And I guess I should probably add, they owned and those units ran. So we started looking at building generation within our territory. And as we were doing that analysis, we became aware that this Panda Sherman plant was going up for auction. And so we pivoted to looking at it as far as some of the benefits of it is it's actually just outside of our territories. So it made a lot of sense from a local standpoint and certainly a regional standpoint. It was close to us. And then it performed great during winter storm Yuri. So that was some other benefits that we saw. It had room for additional capacity if we wanted to add in the future. And it just, it just really checked a lot of boxes for us. At the time, the only downside that we had to it, I guess, was really two things. And one was, it was more megawatts than what we anticipated doing. And then two, it was going to push our balance sheet. I mean, it's basically going to double our balance sheet. And so we just had to work through those, those issues. So, you know, it came down to talking through it. You know, we had a lot of discussions with our board of directors. And, and their respected board of directors. We talked to lenders. We had, we had, we had, we had assembled a great team of advisors to help us with it as well. And so we, you know, we worked through all the, all the issues that we thought. And, you know, we ended up going through the auction process. And, you know, Rager was awarded the auction over a several private equity companies. And for somebody that was staring bankruptcy in the face a couple of years earlier, from where storm Yuri, we thought that was a tremendous success for us. And a real testament to the changes, the things we've put in place as a result of the, the sobriety Yuri. And I'm sure there's a lot of reasons that owners do different things. Can you share any reasons why the previous owners wanted to get rid of the Panda Sherman station? So, my understanding is, I mean, is that Panda, their standard business practice was to build the power plants and then, and then fluff them. So, this was just a normal process for them. I know they were winding up their fun that they had. So, they had three plants, power plants of taxes. All of them were up for sale. The other two were at different locations in the state that didn't make sense to us. But this would be essentially in our backyard. I just made a lot of sense for us. But that's why understanding is they, they were looking to sell these plants just as a matter of business practice. And now, as you alluded to, I believe you're getting ready to build a second gas plant. So, can you talk a little bit about that and what went into that decision and how the project is progressing at this point? Yeah. So, as I mentioned, one of our concerns with the Raybury Energy Station when it parted was the size. We were concerned that our low, we would not grow into that plant until 2030 or something after that. And in our territory, we have a lot of growth. I mean, we've, we've projected a 25% growth over the next 10 years. And that's not counting any type of data centers or large loads. That's just normal organic growth that we have on the system. So, we grew into the Raybury Energy Station a lot faster than we anticipated. And so, we started looking at additional needs. And again, we bought the Raybury Energy Station. One of the things that was really attractive about that plant is it also had brood for expansion. And so, we started looking, doing more analysis and ultimately decided, hey, let's, let's pursue this, this plant, our plant. You know, the city of Sermon, it's been great to work with both on res and also the res too. And, you know, so it's just a, you know, as we look to how can we best serve our members. And especially as we have additional extreme weather events. And just, it just started checking a lot of boxes that let's, let's add some new resource there. And, you know, that's what we're doing as far as the progress is concerned. Amuse, we've got, we've got the turbines and transformers already under contract. Those will be delivered here later this year and then next year. We're, we're working with the state of Texas on the Texas Energy Fund for some of the financing. Mass power is a great benefit as well. And so, we're ultimately looking for a commercial start date of June of 2028 for the new, what we're calling res too. And it sounds like you kind of beat the, the rush because right now there are a lot of people that are having trouble, you know, purchasing a turbine. They're having to wait, you know, four or five years out. Did you guys get in before that big backlog showed up or, or how did that work out? Yeah, we did. We, we got our, our turbines and the transformers under contracts late 2024. And in talking to the supplier, they say, if you haven't been about a couple of months later. It would have been significantly higher and you're probably another three to four years later on terms of delivery. So we, we're really fortuitous at our, at our timing on that. And from what I understand there are even, you know, you mentioned data centers. There are a couple of data centers being built in your general location there. How is that going to affect the plant and potentially further industrial growth in that area? Yeah, Texas estimates and global wafer is there, they're building some facilities there. Actually, I think the Texas estimate plan has gotten operational. And they're, they're making chips for, for these data centers and what have you. But it definitely from our power plants standpoint, having that load close to the generation. It really helps the reliability. You know, those top factors are very energy intensive. So having that dispatchable generation right there is really is a tremendous benefit to them. It also helps us ensure the plants run out of the way they want to. And you mentioned the Texas energy fund. Can you talk a little bit more about that from what I understand? It's something that Texas created after the storm. And it's providing some low interest loans and grants. How does, how is that factored into some of your decisions and what you've done? Yeah, so after we're from the area, the Texas legislature really wanted to try to incentivize additional dispatchable generation on the system. And so they created this, this fund is $10 billion of low cost loans. And so as we were doing our due diligence, I mean, again, we're as a not for profit organization. We're trying to maximize the value of our members money. And so as we were looking at it, it made a lot of sense for us to try to participate in that process. I think there were over 125 applicants initially for that Texas energy fund. There were only 17 that were selected out of that 125 to take the next stage. And Raven was one of those and we're the only co-operative that's in that. We were working diligently with the Public Utility Commission of Texas who was overseeing the TAF administration and their advisors. And, you know, it's been a great process. And, you know, it certainly helps to make the construction of res to a lot more attractive for us and our members, ultimately the consumers at the end of the line here are paying for it. And then understand you also had worked with lawmakers to ensure that electric cooperatives had the same opportunities to participate. Can you talk a little bit more about that and why that was important to you? Yeah, the original statute was written more from an independent our producer or investor until the standpoint where you would have financing specific for the project and you would bring and they would bring their own equity. You know, the cooperatives are structured differently. We're heavily get financed again. We had no investor is our members who come to the table and so equity for a cooperative is a different animal that a investor on utility. We can't just say we're going to go raise $30 million of cash. The other way we can do that is if we essentially charge our members for additional 30 million and you don't want to do that. So it was one of those where we just had to work with the legislature and educate them on how go out of financing works make sure they understood why this was important. And you know, fortunately they they recognize the issue and decided they really did want to make this available to all types of participants, not just not just those who have outside of investors. And so it allowed us to really take advantage of the Texas energy thought while really maintaining the model that blockages were set up on. And you talked a lot about how much growth has been in your area or your territory. I want to go back on that a little bit. And from what I understand you've grown almost double over the past five years since since the storm. What have you learned about managing risk and other company assets or cooperative assets as you've been going through this this rapid growth. Well, I mean, one of the things that you are and is it's never dull around here. And so, you know, I think, I mean, Aaron, you get them now in my head. It's really a question of how do we approach risk and how do we handle risk. Prior to winter storm of the year, some of the things that we had anticipated were really not a big issue. I mean, for example, winter storm years, it's been called a one and a 100 year event. And, you know, prior to winter storm, you know, most people would have just said, yeah, we're not really worried about that. That's an extreme event. It is just it's not likely to happen. So we really really drove home that those extreme events are very real and have a very real impact. And so as we as we fast forward, we started looking at risk, we looked at risk from the resource standpoint. That's why we bought res and while we're building res to we also looked as far as our transmission system and how we manage that. We looked and said, hey, we need to increase some additional, both manpower as well as equipment. And so, you know, we brought in some like, for example, a tracked bucket truck that allows us to get back into the area that normal tires are just going to get stuck. We invested in additional people here at the cooperative as far as bringing in expertise on our spine. How do we need one of some other things we could do to mitigate that risk. And so we really took a hard look at what is our risk, make sure we understood what our risk profile was and what our risk tolerance was and that worked to align those. And you workforce you mentioned and some of the grid upgrades, can you go into that a little bit more like how has your workforce expanded over this last five years and what sort of grid upgrades are most important to you. Is it actual lines or are you talking, you know, distribution centers or something else that's being so important here. Yeah, so we've as far as the equipment is concerned, we've we've really increased our fleet, if you will. So we've we've added a heavy to the crane. We've added a mobile substation that allows us to perform maintenance as proactive maintenance as well as, you know, have fixed basically keep the lights on. We really need to be able to increase the equipment that we have. So we're not dependent on third party contractors and equipment they may have. We need that we need the equipment that allows us to get back into our system. I mean, most cooperatives, very low exception, our rule in nature. And so we're not going down city streets that are paid to get to where we have our facilities. So you have to be able to maintain that. The other side of things that we did is really is our our personnel where some year we had roughly 75 employees today we've got over 100 employees. So we've added a lot of that we've really invested in our alignment of bringing additional alignment in one of the things that we've we've done is we actually created an apprentice program. And so we've we've brought in some apprentices. Some of them are straight out of high school that wanted to get into the into the power space. So we've created a program for that that allows them to come on. Rayburn is an intern in that we've hired three of them. Basically it's about half of them that allow us to train them and develop them in the German linemen. So we're trying to take the approach that we need to try to secure it that here and now as well as as the future. I guess the other couple of pay because we look we also go back to the evaluator system. We need to upgrade any of the polls. Make sure our poll inspection process is is good. Either replace them or make the repairs. You know we also look at lines as far as do we need to re-conductor their upgrades that we need to do. And you know I mean we were focused on where's from Yuri. You know we're also very mindful of the other extreme weather and potential wall fires and that risk very recent that we need to account for as well. And I don't know if if you have any information that you can share about this but I'm curious what other utilities and particularly cooperatives might have done in Texas following Yuri. Did they have similar light bulbs go off in their head where hey we need to get some generation we need to be more prepared for for what potentially could happen again or have any of them going on a business. Has that been a big problem or have the Texas programs kind of helped support the whole industry. Well there is a saying that if you met one co-op you've met one co-op so we're all a little unique but by the same token we all try to help each other out. You know where some of your definitely shifted to change the co-op space and in Texas. The largest GNT in Texas you know they actually ended up following bankruptcy and as part of their vibrant via process or to get out of bankruptcy they ended up becoming a transmission only cooperative so they they had a diverse themselves are the best themselves of their power plants and so that was that was certainly a game changer for for from that standpoint. You know I think you know we all have different approaches even though we're in the same business but we definitely I'm going to tell you that the managers are talking to each other trying to help each other out where we can unless it's learned and you know I think you know one of the things that Rayman tried to do to help facilitate is on this legislation for the Texas energy fund. That change to allow Rayman to take advantage of it will apply to any co-operative that wants to go after that type of funding as well so that was a great way for us to help our fellow cooperatives out. And I guess another question that comes to mind I know you're working on another gas plant how does Rayburn envision renewables are you doing wind are you doing solar is there others opportunities where you're trying to get other types of generation. So we do have some solar in our mix we actually there's a solar project that's in our territory we get we obtain all the power from it so we don't own it but we purchased the output we've got another solar project that is supposed to come online here in another couple of years that will attain the output a bit as well so there's some certainly things that we we look at evaluate I will tell you when is a little bit of a hard hard fit for for us. And we're 90% residential and most of the wind west Texas is blowing at night where we don't need the power so wind has not been a very good fit for us but solar is a nice is a nice fit but I mean we're we're all the above type portfolio as far as what what makes sense. And then the other one I mean Hydro was sometimes considered this the step child renewables but Rayburn's had the Dennis and damn we get 60% of the power out of this and van which is a hydroelectric facility on the red river and we've had that says Rayburn was created. Well David it's been really a pleasure talking with you I guess one last thought here do you have any advice that you would give to other leaders that are facing you know rapid growth and rising risk that you're seeing today what would you tell them to help out. Well I think you know what is from your push does to have to be reactive when it when a hit and I think you much rather than you proactive so I I would suggest don't wait for that next crisis before you have to make some of the hard choices you know look make sure you understand your risk the extreme events are very critical we normally focus in on what's the highest probability. That's going to occur and we really need to be mindful of those those extremes the other thing I would add is you know Rayburn we can have a saying about that is close not company policy. And so don't let the way that you've always done things getting the way of what needs to be done. Yeah that's a that's a great philosophy so again for listeners I've been speaking with David Nailer president and CEO of Rayburn electric cooperative it has been a pleasure having you on the program and good luck with your new plant and going forward. Appreciate it Aaron thank you very much.