AUSTIN, Texas – The demands of lawmakers are growing louder when it comes to addressing what some call a multi-billion-dollar billing error. The dispute involves energy prices charged during the winter storm.
Practically the entire state Senate is calling on the chairman of the Public Utility Commission to force ERCOT to retro-actively change the prices charged during the storm. However, PUC chair Arthur D’Andrea is pushing back by stating he believes that is a mistake.
The PUC, which oversees ERCOT, hired an independent analyst to monitor our state’s energy market. Potomac Economics reported ERCOT left emergency prices in places too long, which led to $16 billion in overcharges to market participants. Lawmakers said two businesses filed for bankruptcy, and now they worry the economic fallout will cause other providers to go under, people to lose jobs and the taxpayers to see higher bills.
“Right now, we know who is hurt and who is not, and so, there’s a certain ‘Devil you know’ aspect of just not re-pricing,” D’Andrea told members of the Texas House State Affairs committee.
D’Andrea explained re-pricing may help some, while causing extreme financial hardship for others. He also said certain markets had settled, and retroactively changing energy prices could create ripple effects with dire financial consequences.
“Instead of making a huge mess that we can’t foresee and losing twice, lets stick with the status quo. We know who the injured parties are, let’s help them out,” said D’Andrea.
He also balked at the assertion that energy providers would pass on their financial losses to customers in terms of rate hikes. He said Texas’ market is easy to enter and and there are plenty of providers willing to compete for business.
“There’s a bunch of other retail electric providers running around that don’t have debt on their books and can afford to charge a lower rate,” said D’Andrea.
These answers didn’t sit well with some members of the committee who were blunt in telling D’Andrea they had no problem searching for his replacement if he was unwilling to re-price the storm.
“It’s something that shouldn’t have happened and we can reverse it without the world coming to an end. If you can’t do it, then we need to find somebody who can,” said State Rep. Richard Raymond/(D) District 42. “The longer we wait, the more complicated it gets. It’s not as complicated in my mind. You overbilled; you shouldn’t have done it. Give the money back.”
D’Andrea wouldn’t budge, telling legislators there was no error, and energy prices charged during the storm was the Texas market’s reaction to the power grid nearly failing and the need to get every available power plant online.
“It’s not a mistake, it wasn’t an error. It’s a very complicated formula that spit out a number we’re all surprised by and maybe we need to change that formula,” said D’Andrea. “I don’t think you can call that a mistake. I think you just say we all agreed to a formula that now we don’t like the result.”
D’Andrea also disputed the $16 billion price tag, stating he believes the cost is around $3-billion.
“To me, it’s starting to sound like ‘What can we get away with,’ and that’s not good,” said Raymond.
During a Senate jurisprudence committee hearing the same day, the market monitor who made that assessment, defended her report and her figures.
“To acknowledge there was a mistake that led to erroneous billing, is that a fair statement?” asked State Sen. Joan Huffman.
“That is our independent perspective,” said Carrie Bivens with Potomac Economics.
Bivens also testified that “$16 billion is the accurate representation of the economic value of that pricing error so that $16-billion is correct.”
D’Andrea still said he does not believe ERCOT made an error in pricing, therefore he doesn’t believe he has the legal authority to order a re-pricing without legislators passing a bill.
Governor Greg Abbott has added addressing the pricing issue as an emergency agenda item to the current legislative session.