HOUSTON – The Texas state energy regulator unanimously vetoed on Friday a request to cut about $ 16 billion in state energy tariffs during the last day of the state’s February cold wave, saying that even a partial repricing could have unwanted effects.
The Public Utility Commission has postponed voting on a separate proposal to split service charges that would have saved about $ 1.5 billion for retail electricity suppliers. Both proposals were recommended by the state’s independent energy market consultant.
Total electricity expenditures increased by about $ 47 billion during a winter storm that destroyed nearly half of Texas power plants, driving up gas and energy prices that disrupted the state’s energy sector. The storm-related costs have driven a company into bankruptcy and a dozen others being disconnected from the state’s power grid for failure to pay.
“PUC chose to ignore the recommendation of economists hired by the state to advise regulators,” said Brandon Young, chief executive of Payless Power, an electricity marketing company, in an interview. “As a result, $ 16 billion in costs are being passed on to all electricity providers – retail electricity, municipal suppliers and cooperatives.”
The state grid operator raised energy prices to $ 9,000 per megawatt-hour, to induce the plant’s operator to either increase power or remain operational for five days. However, that price 450 times normal remained in effect after the emergency passed, adding about $ 16 billion to the total.
State market consultant Carrie Bivens described the price of the last day as a mistake by the Texas Electric Reliability Council’s grid operator, recommending PUC “correct ERCOT real-time prices”.
The price revision could hurt companies that had hedged their energy costs and resulted in greater uncertainty, the commissioners said.
“Decisions about these prices were made in real time based on information available to everyone,” said PUC president Arthur D’Andrea. “It is impossible to decipher.”
The error and fees charged for the standby power service that were provided sparked a storm of protests by dozens of companies that sell electricity in Texas. On Friday, the commissioners postponed the vote on Bivens’ request to reduce fees for ancillary services, saying there was no reason to hurry.
Vistra Corp, a power plant operator that receives some of the fees, argued that it was unfair for regulators to choose “certain prices” for a reversal. Ancillary service commissioners are considering that the cut would not reduce residential bills, he said.
“It would not be appropriate for the Commission to just pass on prices for ancillary services without addressing the other issues and price challenges,” wrote Amanda J. Frazier, a senior vice president at Vistra, in a letter to the commission.
Federal and state investigators are examining why the state and public services were not prepared for a deep freeze that left up to 4.3 million Texans without power, heat and water. Consumers will see higher prices as storm costs are passed through tariff increases or fewer supplier options, officials said.