Texas can only recover a fraction of $16 billion ERCOT power pricing gaffe
By Taylor Goldenstein
An independent market monitor for the state said Thursday only a fraction of the $16 billion that was overcharged by the state’s grid operator as last month’s winter stormsubsided can now be recouped for consumers.
That’s because most of the charges have already been settled through contracts and other means that cannot be changed now, the monitor, consulting firm Potomac Economics, said in a letter Thursday.
Now it appears that a maximum of $5.1 billion of the overcharges by the Electric Reliability Council of Texas can be refunded by retroactively changing the price of power and other related services — a move that both Lt. Gov. Dan Patrick and Gov. Greg Abbott have supported.
The market monitor has blamed ERCOT for leaving sky-high emergency pricing of wholesale energy in effect for 32 hours too long at the tail end of the freeze, running up unnecessary costs for power companies that struggled to meet demand and, ultimately, driving up bills forsome customers. Utilities that weathered the storm, on the other hand, raked in hefty profits by selling power onto the grid.
Independent market monitor director Carrie Bivens, who also testified but in the Senate Jurisprudence Committee, disagreed and said the PUC has the authority to order ERCOT to reprice. Bivens also said she spoke with ERCOT CEO Bill Magness on Thursday, Feb. 18, and told him she had concerns about leaving the $9,000 per megawatt hour wholesale price cap in place.
The monitor has described the billions of dollars of overcharge as an error, saying ERCOT should have let the market determine pricing once the emergency situation improved.
At the same time, retail electric companies are struggling and some may not survive. Among them is the state’s largest electric cooperative, Brazos Electric Power Cooperative, which filed for bankruptcy protection earlier this month.
Cantrell added that if enough providers go bankrupt and exit the market, the lack of competition could also have a negative effect on prices. The economic impact could be blunted, however, if the state moves forward with repricing.