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HOUSTON – The state of Texas electricity regulator on Friday unanimously rejected a request to reduce the state’s electricity charges by about $ 16 billion during the final day of the wave cold state in February, saying even a partial price revision could have unintended effects.
The Utilities Commission deferred the vote on a separate proposal to reduce service charges that would have saved retail electricity providers about $ 1.5 billion for electricity never delivered. Both proposals were recommended by the independent state electricity market advisor.
Total electricity charges jumped by about $ 47 billion in a winter storm that destroyed nearly half of Texas power plants, raising gas and electricity prices that rocked the energy sector of State. Costs related to the storm put a company into bankruptcy and a dozen others were taken off the state grid for non-payment.
“The PUC has chosen to ignore the recommendation of economists hired by the state to advise regulators,” Brandon Young, chief executive of Payless Power, an electricity marketer, said in an interview. “As a result, $ 16 billion in costs are passed on to all electricity suppliers – electricity retailers, municipal suppliers and co-ops.”
The state grid operator had raised electricity prices to $ 9,000 per megawatt hour, to encourage the plant operator to increase power or stay on for five days. However, that price 450 times the usual price remained in place after the emergency passed, adding about $ 16 billion to the total.
State Market Councilor Carrie Bivens described the last day’s pricing as an error by the Electric Reliability Council of Texas network operator, recommending the PUC to “correct ERCOT’s real-time prices.”
The price revision could hurt companies that had covered their electricity costs and lead to greater uncertainty, the commissioners said.
“The decisions regarding these prices were taken in real time on the basis of information accessible to all,” said Arthur D’Andrea, President of the PUC. “It is impossible to decipher.”
The error and the charges for back-up power service that were provided sparked a storm of protests from the dozens of companies that market power in Texas. Commissioners on Friday postponed the vote on Bivens’ call for lower ancillary service fees, saying there was no reason to rush.
Vistra Corp, a power plant operator who receives part of the fee, argued that it was unfair for regulators to choose “certain prices” for a step backwards. Auxiliary services commissioners believe the reduction would not reduce residential bills, the statement said.
“It would be inappropriate for the Commission to simply re-price ancillary services without addressing the other pricing issues and challenges,” wrote Amanda J. Frazier, Senior Vice President of Vistra, in a letter to the Commission.
Federal and state investigators are examining why the state and utilities were unprepared for a deep freeze that left up to 4.3 million Texans without power, heat and water. Consumers will see higher prices as the costs of the storm are passed on through tariff increases or reduced supplier choices, officials said.
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