It is unclear who would be helped or hurt — and by how much — if lawmakers try to revise electricity market prices charged during the winter storm.
Companies and entities at every level of the Texas energy supply chain are anxiously waiting to see whether the Texas Legislature will retroactively adjust the price of power in the state’s electricity market during the February blackouts in which more than 50 people died.
Some have said they would benefit from a decision to readjust the market, while others have said they would be hurt by such a move. But who would be helped or hurt, and by how much, is unclear — and lawmakers and regulators have not said how they would retroactively change the state’s electricity market more than a month after those prices settled.
Republican Lt. Gov. Dan Patrick has pressed regulators, lawmakers and even Republican Gov. Greg Abbott to readjust what happened in the market during the winter storm. In doing so, Patrick has turned the conversation about repricing into a political battle between the three most powerful people in Texas government.
Experts inside and outside the Capitol described this debate about repricing the market as a political sideshow about an issue that does not impact a majority of Texas electricity consumers and would do nothing to protect Texans from the next time extreme weather hits the state.
“I think it might actually do more harm than good,” Joshua Rhodes, research associate at the Webber Energy Group at the University of Texas at Austin, said of the prospect of repricing the market.
In Texas, where private companies — as opposed to government — are largely the ones who invest in the energy space, Rhodes said: “If the rules change after the game, that may have a chilling effect on companies wanting to come in and invest money in Texas.”
Rhodes said there would be fewer companies wanting to invest money in the Texas energy industry where the regulatory process is uncertain — and repricing would create great uncertainty.
The Electric Reliability Council of Texas manages the state’s power grid and controls the prices power generators charge to retail electric providers, such as power companies and city utilities. Facing widespread outages during the storm, ERCOT set the price of electricity at $9,000 per megawatt-hour — the highest amount allowed.
The controversy stems from a 32-hour period during the freeze when prices were left high, even though ERCOT was no longer forcing outages due to a limited energy supply. An independent market monitor found that ERCOT erred in keeping the $9,000 cap in place, resulting in $16 billion in unnecessary charges to power companies and others. The monitor recommended energy sold during that period be repriced at a lower rate, which would allow ERCOT to claw back about $4.2 billion in payments. Outgoing ERCOT CEO Bill Magness insisted the high prices were necessary to incentivize generators to send power to the grid and to keep big customers from turning their power back on and increasing demand.