Repricing the state’s electricity market after the winter storm seems increasingly unlikely

Published: Mar. 22, 2021 at 6:37 PM CDT
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KILLEEN, Texas (KWTX) - Last week, the Texas Senate fast-tracked a bill that would have forced the Electric Reliability Council of Texas (ERCOT) to reverse billions of dollars in charges racked up during the winter storm.

The upper chamber introduced, voted on and passed Senate Bill 2142 all in the same day.

The bill took aim at a 32-hour window beginning Wednesday, Feb. 17 — during the week of widespread power outages in Texas — when ERCOT kept electricity at its maximum possible price of $9,000 per megawatt hour even as the state was no longer facing energy shortages.

“The electricity price was still at its cap while almost all residential households were being electrified,” said Phil White, an energy researcher at University of Texas at Austin.

That led to what some have characterized as $16 billion in overcharges in the market.

ERCOT’s CEO Bill Magness said at a hearing in Austin earlier this month ERCOT kept the prices high to incentivize generators to continue producing electricity.

Through SB 2142, Lt. Gov. Dan Patrick and many of the state’s senators said that money needs to be returned and urged the Texas House to support the bill.

However, the House declined to take up the bill last week, and a 30-day rule means that ERCOT no longer has the authority to reprice the market.

The lieutenant governor has since begun urging the governor to take executive action to reverse the charges.

“It would certainly help those consumers who were exposed to variable rate plans or just directly to the wholesale market because, for the amount of time that ERCOT and the PUC kept the price artificially high, they’d get a refund of some sort,” said Ed Hirs, an energy researcher at the University of Houston.

That refund now looks increasingly unlikely.

Meanwhile, some experts believe that repricing the market could cause more harm than good.

“Repricing electricity during this 32-hour period of time might scare off some investment, and that’s what our grid relies on,” White told KWTX.

“We don’t have government coming in and building power plants; it’s private companies who see, ‘Oh I like how the market is structured here,’” he added.

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