In Texas this week, freezing temperatures have overwhelmed the state’s power grid, causing blackouts, power outages over several days – and catastrophic electricity bills.
According to the Dallas Morning News, some Texans were hit with electricity bills totaling $ 17,000 for just a few days of electricity, often more than the normal cost of energy in Texas.
Specifically, it is Texas residents who rely on a wholesale energy plan, rather than a flat rate plan, who have seen their bills soar after the state’s energy demand soared this week with the winter storm. Uri and temperatures plummeting. Texas, which has a deregulated electricity market, has several suppliers, both wholesale and at fixed rates.
Fixed-rate customers pay a combined fee for their energy, but wholesale buyers pay a variable fee; whatever the current price per kilowatt hour of electricity. Wholesale power plans, like those offered by the Texas power company Griddy, can be attractive because for a long time, a customer on a variable plan will pay less than one on a flat rate plan, according to the spokesman of the Texas Public Utility Commission, Andrew Barlow.
The problem is that the weather is not always good – in Dallas, on Tuesday, the low temperature was 4 degrees Fahrenheit, colder than in Anchorage, Alaska.
This icy weather has led to blackouts across the state amid increased demand for energy; in turn, this demand caused prices to skyrocket, with wholesale rates rising to around $ 8,800 per megawatt-hour in the Dallas area on Wednesday.
According to Reuters, the wholesale rate before this week’s storm was just $ 50 per megawatt-hour. On Wednesday, the Texas Public Utility Commission decided to limit wholesale prices to $ 9,000 per megawatt-hour, or $ 9 per kilowatt-hour.
Griddy, the wholesale energy company that faced the most grudge from online customers, warned customers on Monday that their rates could skyrocket with the onset of cold weather – but those warnings didn’t arrive in time for many Texans to switch to a new provider. services, the Dallas Morning News reported on Friday, and people were still taken aback by electricity bills.
“$ 5,000 for five days is outrageous,” Dallas resident DeAndré Upshaw told Morning News reporter Maria Halkias on Friday. “Nobody could have predicted this, except the people who manage the service and the power grid.”
The winter storm was not the first time that wholesale customers in Texas had high bills due to the unexpected weather; in 2019, a heat wave caused a spike in energy use – and a sudden increase in wholesale prices – that caused many Texans to pay hundreds of dollars more than they expected for energy. But for some Texans, the current situation is worse by several orders of magnitude and comes at a difficult time economically, with the United States in the midst of a pandemic-related recession.
According to The Verge, “4.8 million Americans were unable to pay at least one energy bill last year and received a termination notice from their dealership.” Texas’ oversized wholesale energy bills are sure to make the problem more acute after the storm.
As Texas struggles to recover from the winter storm – President Joe Biden approved a major disaster statement for the state on Saturday – it is unclear what will happen next for Texans who have been stranded with astronomical energy bills.
In a statement on Friday, however, Griddy said he was “seeking customer relief” from the Texas Electric Reliability Council (ERCOT), which manages most of the state’s electrical grid, and the Public Utility Commission of Texas. state.
“Griddy is continuing these efforts and is committed to crediting customers for any relief received, dollar for dollar,” said the company. Without that relief, customers can run out of money in thousands of dollar bills.
Giant electricity bills are only part of Texas’s energy problem this week
Texas has faced a unique difficulty this week in part because of the state’s unique energy system: unlike the rest of the 48 states, most of the lone star state depends on ERCOT independent internal power grid, which supplies about 90% of the state’s electricity.
El Paso is the only city in Texas that is part of the western interconnection power grid. The rest of our state has its own outdated power grid, thanks to employees trying to escape federal regulations. Thanks to them, 2.5 million Texans have no energy pic.twitter.com/Ik9SSc4ioh
– Sunrise El Paso (@SunriseElPaso) February 16, 2021
As Umair Irfan of Vox explained earlier this week, it has been a difficult week for this network, even though Texas is “the largest producer of oil, natural gas and wind power” in the country. Demand far exceeded supply, which led to dramatically higher blackouts and prices.
According to Irfan:
The sudden cold spell this weekend put the state’s extensive resources to the test, with demand reaching a record peak in winter, over 69,000 megawatts. That’s 3,200 MW more than the previous record set in 2018.
As demand has reached new heights, electricity supplies have dropped dramatically in the past few days, well below what operators had expected. Normally, ERCOT plans for the winter to be much hotter and foresees less energy demand. Power providers often schedule downtime and maintenance during the winter months to prepare for the huge annual increase in electricity demand in the hot Texas summer. The state’s extensive wind and solar energy resources also decrease in winter, so ERCOT does not depend on them to meet much of the expected demand.
The Texas power grid was also hampered by substandard electricity supply after natural gas pipelines froze in the winter and power production fell across the line. This put the state in an even worse situation and also contributed to high energy prices.
Texas’ decision to remain on an independent power grid dates back more than 80 years, according to NBC, and was aimed at keeping Texas public services free of federal regulation. It was successful in that regard – but at the cost of not being able to borrow energy from other states during a crisis.
“The Texas power grid is really an island,” Rice University professor Daniel Cohan told Vox earlier this week. “Whatever happens in Texas, remains in Texas.”
As of Friday, things were getting back to normal with the Texas grid, although the state still faces water and food shortages. ERCOT ended the emergency conditions and returned to normal operation; the number of people without power dropped to about 58,000 by late Saturday afternoon, instead of millions.
For Griddy customers and other Texans on a wholesale plan, however, the effects of the storm will remain in the form of giant electricity bills.
“I don’t have that kind of money,” said a Texas resident, Akilah Scott-Amos, to the Daily Beast this week. “I now owe Griddy $ 2,869.11. This will put me in debt, it will hinder my credit. Will they cut me? In the midst of this ongoing crisis? “