Texas Overcharged $16 Billion For Power, Won’t Reverse Overcharge
Independent monitor Potomac Economics has found that a Texas mistake led to $16 billion in overcharges for electricity during last month’s freeze and power outages.
However, the Public Utility Commission of Texas, on Friday, said it doesn’t intend to reverse the charges.
Commission Chairman Arthur C. D’Andrea said repricing the energy markets was too difficult, with too many uncertainties.
The Electric Reliability Council of Texas (ERCOT) implemented blackouts around 1 AM on February 15 after an Arctic blast of cold air sent Texas into a deep freeze, drastically increasing demand for electricity as residents turned on electric heaters to stay warm. Power plants were also crippled by the freeze, as was the natural gas system’s ability of fuel delivery.
The Public Utility Commission, that afternoon, set electricity prices to $9,000 per megawatt, saying in an order that the price should be $9,000 “if customer load is being shed,” meaning if there were blackouts implemented by ERCOT.
ERCOT kept prices at $9,000 until it ended the power emergency on February 19. However, Potomac found the elevated prices should have ceased on February 18, the last time ERCOT ordered blackouts. Potomac found that the $9,000 price should have ended 33 hours earlier than it did.
“Unfortunately, ERCOT exceeded the mandate of the Commission by continuing to set [prices at $9,000] long after it ceased the firm load shed,” Potomac said in a letter.
D’Andrea said reversing the overcharge could have unintended consequences, due to a large number of private transactions and hedges outside of the commission’s view.
“We just see the tip of the iceberg,” he said. “You don’t know who you’re hurting. You think you’re protecting the consumer and turns out you’re bankrupting a co-op or a city. And so it’s dangerous, after something is run, to go around and redo it.”
“Decisions were made about these prices in real time based on information that was available to everybody, to all market participants,” D’Andrea said, “and they did all sorts of things that they wouldn’t have done if the prices were different. And it’s just nearly impossible to unscramble this sort of egg.”
“I know, on the surface, it looks like – oh no, it’s just money that generators got, and if you reverse it, it will go to the consumers,” D’Andrea added, “but that is very simplistic, and it’s not how it works.”
Sitting Public Utility Commission commissioner Shelly Botkin also indicated Friday she didn’t intend to reverse the overcharge.