Texas chooses not to fix $ 16 billion in energy overload

“It is impossible to unscramble this type of egg,” he said.

D’Andrea said there are so many hedges and private transactions out of the commission’s view that taking action to help consumers could have unintended consequences. “You think you are protecting the consumer and you end up bankrupt a cooperative or a city,” he said.

The commission met on Friday morning to consider a recommendation from its independent market monitor, which concluded that Texas kept wholesale prices artificially high for 33 hours longer than guaranteed during a winter freeze last month. , resulting in $ 16 billion in excess consumer charges.

Amid the freeze, which resulted in mass blackouts that left millions of families in the dark for days, the three-member panel appointed by Texas Governor Greg Abbott ordered the state’s network operator to raise wholesale energy prices for the peak price of $ 9,000 per megawatt hour.

The market monitor said in a report presented on Thursday that these prices should have been lowered when the network operator stopped instituting blackouts, and not when the power emergency ended a day and a half later. He recommended reversing $ 16 billion in collections.

Earlier this week, the chairman of the previous committee, DeAnn Walker, resigned under criticism, leaving as chief commissioners D’Andrea and Shelly Botkin, who also indicated on Friday that she was not inclined to call for repricing.

Several market participants and consumer groups urged the commission to redefine and cut prices by $ 9,000. Vistra Corp.

VST 1.37%

, which is one of the largest power generators in Texas and also has a large electricity retailer, said that not repricing “would result in unfair and irrational results”.

Texas is facing huge financial consequences after last month’s electricity crisis, with the state utility commission and the grid operator disagreeing on exactly what went wrong.

A few hours after the blackouts, the utility commission took the unusual step of abandoning the market-based pricing mechanism and ordering wholesale energy prices to stay at the $ 9,000 limit until the network-ordered blackouts ended.

The network operator complied and kept prices at the maximum price after it stopped asking for blackouts, but at that time the local electricity companies were still struggling to turn on the lights and some continued to have widespread blackouts.

Four-day extended prices of $ 9,000 – an exponential increase over normal prices in Texas, which last year averaged $ 22 a megawatt-hour – took a massive financial toll on some market participants.

Vistra said it had losses between $ 900 million and $ 1.3 billion. Many wind farm operators, who needed to buy electricity because of hedge contracts, are in financial difficulty. A large electrical cooperative filed for bankruptcy protection.

The utility commission did not vote to reject the suggestion of the independent market monitor, leaving the door open for policy change in the coming weeks.

Senator Nathan Johnson, a Democrat from Dallas, said he considered the agency’s decision a mistake. He said he would have supported a clawback to ease concerns among power generators and retailers about regulatory intervention in setting market prices.

“This would have sent a stronger signal to the market,” he said.

—Katherine Blunt contributed to this article.

Write to Russell Gold at [email protected]