Despite Losing Power for Days, Texans Will Pay Higher Power Bills—Perhaps for Decades to Come
The bankruptcies and staggering electricity charges are beginning to arrive. Could it go from bad to worse?
March 4, 2021
As Texans begin to thaw out from the mid-February freeze that led to widespread outages across the state and left more than four million homes without power, the long-term costs of the electricity crisis are just beginning to come into focus. “For Texans, the situation could go from bad to worse,” said Marcie Zlotnik, former chairman of Houston-based StarTex Power, an electricity retailer. “I’m concerned about increasing power prices, job losses across the industry, and the long-term implications for the market and consumers, who have already suffered through a horrendous ordeal.”
Factoring in property damage from burst pipes and lost output from factories and businesses, the storm could be the costliest in Texas history, exceeding the $125 billion financial fallout from Hurricane Harvey. The blackout also resulted in a horrendous death toll: at least forty, a number that is expected to rise and could surpass the roughly one hundred who died in Harvey.
But the financial reckoning is only getting started. One week after the storms, the state’s grid operator, the Electric Reliability Council of Texas, which collects payments from retailers and makes sure they get to the proper electricity sellers, was short about $1.3 billion in payments, stoking concerns about the liquidity of the power market and the possibility that many retail electricity providers will file for bankruptcy. Money is running tight all across the system, raising the prospect that much of the cost for the lack of winter storm preparation will ultimately fall to consumers.
Some reports put the number of potential defaults by retail providers, municipal utilities, and cooperatives at almost two dozen. Brazos Electric Power Cooperative, one of the state’s largest co-ops, filed for Chapter 11 bankruptcy on Monday, citing a $1.8 billion bill from ERCOT.
A year from now, it’s almost certain that Texans will have fewer electricity providers to choose from, and those that remain are more likely to be owed by companies with deep pockets, such as generators NRG (based in Houston), Vistra (based in Irving), and Chicago-based Exelon (which owns Maryland-based Constellation, which in turn owns Houston-based StarTex).