Only a fraction of the $ 16 billion in Texas electrical overloads from last month’s shutdowns is likely to be recovered for consumers trying to reverse the charges, an independent market monitor said Thursday.
The monitor – which first revealed last week that Texas appeared to have charged $ 16 billion in excess for electricity during the winter storm that left millions without electricity at freezing temperatures – said that after a new review , believed that $ 3.2 billion was most likely to be recovered.
This is because most of the overheads were already settled in the financial markets or were managed by companies that own power plants and retail electricity suppliers, the monitor, Potomac Economics, said.
The overloads started a political struggle in the Lone Star State. Top Texas politicians are demanding that the state utility commission and power grid operator pay the market again to reverse the charges involved, while generators, market experts and others warn that this measure it would lead to a loss of confidence in the Texas markets.
The monitor, which reports to the Texas Public Utilities Commission, had recommended that the charges be reversed last week.
Carrie Bivens, the director of Potomac Economics that oversees the Texas market, said additional data had come to light since the first evaluation of the monitor, allowing for a more detailed view of hedging activity and other variables that they affected what could be done retroactively.
“Without conducting that analysis, it was difficult to know where those dollars would go,” he told state lawmakers Thursday.
Arthur C. D’Andrea, chairman of the utility commission, initially revealed the monitor’s new assessment during a Texas House committee hearing in which lawmakers asked him to explain his position on whether prices s ‘should review. The commission has faced growing political pressure in recent days, with Texas Gov. Greg Abbott, Lt. Gov. Dan Patrick and most of the state Senate who have publicly called for the price to be repeated. .
Amid the freeze, the three-member utilities commission, appointed by Mr. Abbott, ordered the Texas Electric Reliability Council, the state’s grid operator also known as Ercot, to raise energy prices. wholesale up to a maximum price of $ 9,000 per megawatt hour. The independent market supervisor said in a report last week that Texas kept artificially high wholesale prices for more than 30 hours longer than necessary, creating at least $ 16 billion in surcharges.
Wholesale prices are charged by generators, which sell electricity to large cooperatives and other suppliers who distribute energy to retail customers.
Ercot chief executive Bill Magness told lawmakers Thursday that the network operator made a deliberate decision to keep prices at that level once it stopped calling off to keep generators online and give -the certainty of prices while making operational decisions.
“We needed to maintain system coherence, system integrity in the face of a lot of risks,” he said.
“We didn’t want to go back to the danger zone,” he added.
Ercot said Thursday that electricity retailers had failed to make close to $ 3.2 billion in payments required since the end of the shutdowns last month. The network operator, which collects this money and uses it to pay power plant operators, has used $ 800 million in an income account to meet some of these obligations.
D’Andrea previously indicated that he opposed the pay and reiterated that position on Thursday, saying the move would be overly complicated and compare it to taking off an egg. Its price, he said, could create unforeseen problems in recovering money from power generation companies and electric cooperatives.
“Right now we know who’s hurt and we know who isn’t,” he said. “There’s a certain aspect of ‘demon you know’ of not getting paid.”
Houston residents took refuge in a furniture store during last month’s weather crisis.
Photo:
Go to Nakamura / Getty Images
Potomac Economics said that in addition to the $ 3.2 billion in “overpriced energy,” another $ 1.9 billion could also be recovered from incorrect ancillary charges.
Currently, Mr. D’Andrea is the only member of the committee. Former Commissioner Shelly Botkin resigned Monday. DeAnn Walker resigned from the presidency earlier this month after state lawmakers called for his removal.
Market participants are deeply divided over whether the utility commission should replicate electricity sales, and some express concern that this dramatic state intervention will shake investor faith in the Texas electricity market.
Daniel Hudson, CEO of Temple Generation I LLC, which owns a 750-megawatt natural gas plant in central Texas, warned that in a case to the utility that, following suggestions from the market supervisor, “it would have a terrifying effect on investment The Ercot market at the most critical moment in its 20-year history ”.
Some of the state’s leading generators, including NRG Energy Inc.
and Calpine, have spoken out against the possibility of a return to prices, arguing it could create a cascade of unintended consequences.
“NRG is concerned that re-billing the ERCOT market, after certain hours or days, would cause long-term harm to consumers and incur unknown costs that could exceed the perceived benefits,” the company wrote in a statement to the commission. of public services.
Several electric cooperatives, however, have expressed support for retroactive pricing in the submissions to the commission. Brazos Electric Power Cooperative Inc., the largest in the state, urged the agency to take steps to review the charges, which it said caused undue damage to its balance sheet. Brazos applied for Chapter 11 bank protection earlier this month and cited more than $ 2.1 billion in costs associated with blackouts.
“Because Brazos Electric and its members place the immediate humanitarian needs of its members and consumers above financial interests, Brazos Electric, its member cooperatives and its retail consumers face significant financial damage,” he said. to say.
Write to Katherine Blunt to [email protected] and Russell Gold to [email protected]
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