Texas' Public Utility Commission Will Not Lower Electricity Prices That Skyrocketed In The Blackout
Texas regulators on Friday chose not to lower the price of electricity in the days following last month’s blackout. The decision has massive implications for Texas ratepayers, electric companies and power generators.
During the deadly Texas blackout last month, the wholesale price of electricity skyrocketed to its highest allowable rate: $9,000 per megawatt hour. The Electric Reliability Council of Texas, the state’s grid operator, allowed it to stay that high for days after.
In a hearing Thursday before the state Senate's Committee on Business and Commerce, ERCOT said maintaining the high price was necessary to manage the re-powering of parts of the grid that had been cut off.
But others have called it a serious mistake.
The state’s independent market monitor has said keeping electricity prices so high after the blackout was an error that led to $16 billion in overcharges for electricity.
The high price tag for a megawatt has pushed retail electric providers, and the state’s largest Electric Cooperative, into bankruptcy. At the Thursday hearing, lawmakers heard that companies’ inability to pay their bills is creating a domino effect of losses that is pitching the state’s energy market into crisis.
“The financial distress is insurmountable," Catherine Webking, a lawyer for the lobbying group Texas Energy Association for Marketers, told lawmakers.
The high cost of electricity will also mean higher bills for many customers.
To correct the problem, the independent market monitor suggested a little time travel. The Public Utility Commission of Texas, it said, should retroactively “reprice” electricity on Feb. 18 and 19 to a lower rate. That would reduce the bills electricity providers owe to generators and others, and allow the providers to stay solvent and bill their customers less.
But at the PUC meeting on Friday, commissioners decided not to “reprice.”
PUC Chair Arthur D’Andrea said retroactively lowering electricity prices would bring instability to the market and have unforeseen consequences.
“We just see the tip of the iceberg,” he said. “We don't see all the hedges and stuff beneath the surface. And so you don't know who you're hurting. You think you're protecting the consumer, and it turns out you're bankrupting a co-op or a city.”
Some power companies and utilities made money selling electricity in the blackout. They opposed the repricing.
At Thursday’s Senate hearing, Clif Lange with the South Texas Electric Cooperative, said his group had come out of the blackout in a “financially neutral” position. But if prices were reduced, it would hurt the co-op.
Austin Energy, which sold electricity during the time prices were high, would also likely stand to lose money if those rates were “repriced.”
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