On Friday, the Electric Reliability Council of Texas (ERCOT) unanimously vetoed a request to cut $16 billion from state power charges.
What We Know:
- During the winter storm that is now being dubbed “one of the worst blackouts in U.S history,” ERCOT raised power prices, giving power plant operators a choice to either increase power or stayed running for five days. Unfortunately, the price increase stayed in place longer than originally intended, meaning it was still in place well after the emergency had passed. The incident that is now being referred to as a “mistake” has garnered up to $16 billion in overcharge fees.
- Total electricity charges jumped to about $47 billion during the winter storm. This knocked out nearly half of Texas power plants, jacking prices upwards for gas and power for the entire state. Independent market-monitoring group, Potomac Economics, were hired to assess ERCOT’s error.
- The firm made a recommendation in a letter to regulators that the pricing is corrected and that $16 billion in charges be reversed. ERCOT has since rejected the request and defend its decision by mentioning that even a partial repricing could have unintended effects. A day before their decision, CEO Bill Magness issued a two-month termination notice by ERCOT’s board of representatives.
- The entire state of Texas relies on ERCOT to supply power companies with power. According to NASDAQ, federal and state investigators are still processing information on why the state and utilities were unprepared for a “deep freeze that left up to 4.3 million Texans without power, heat, and water.” Senior members Shelly Botkin and DeAnn Walker of The Public Utility Commission (PUC) have recently resigned as well amid the controversy.
- The winter storm and resulting blackouts have been blamed for close to 50 deaths in Texas. Storm related costs have left some companies bankrupt, and others face being unplugged from the state’s grid for non-payments. As for consumers, they will also see higher prices as storm costs get passed down through increased rates or fewer choices in providers.
Governor Greg Abbott recently issued an order to reopen Texas amid the power controversy and coronavirus pandemic.
