Back in February, the state of Texas experienced an “Unprecedented cold weather event” that left millions without power while temperatures plummeted. Winter Storm Uri, predicted to impose a significant yet manageable strain on the power grid, instead led to the near-collapse of the state’s infrastructure and extravagant energy prices for days on end. For a brief recap on the timeline of the crisis and its aftermath, see below:
Feb 12th Texas Governor Greg Abbott declares a State of Disaster.
- Feb 14th ERCOT files a Request for Emergency Order with the United States Dept. of Energy.
- Feb 15th ERCOT declares an Energy Emergency Alert (EEA) Level 3 is in effect. Rotating outages start. PUC sets the price of electricity at the High System-Wide Offer Cap (HCAP) rate of $9,000 per MWh.
- Feb 19th ERCOT ends emergency conditions. Link
- Feb 21st PUC orders an immediate suspension of disconnections for non-payment until further notice, including ordering utilities not to process disconnection.
- Feb 24th PUC opens investigation into exorbitantly high bills being received by some Texas customers with plans indexed to the wholesale market rate.
- Feb 25th Joint hearings held in the Texas House and Senate chambers to determine the factors at play that led to the massive grid outages.
- Feb 26th ERCOT posts notice showing that electricity providers failed to make $2.12 billion in payments that were due to ERCOT the week after the winter storm.
Mar 4th Potomac Economics, the Independent Market Monitor for the PUC of Texas, releases filing detailing that ERCOT recalled the last of the firm load that was shed at 11:55PM on Feb 17th, and therefore should have immediately ended the use of the HCAP price for electricity of $9,000 per MWh in accordance with the Order provided by the US Department of Energy. However, it continued to hold the price at this rate for an additional 32 hours throughout the morning of February 19th, resulting in $16 billion of additional costs to electric companies (Who are contractually obligated to purchase electricity at market prices in quantities to match the demand of its customers).
Many Texans are now asking what went wrong, and if the devastation millions saw could have been avoided. In truth, a vast array of factors all snowballed into what is now projected to be the costliest natural disaster in the state’s history, and fingers could be pointed in perpetuity- but the path lay forward, and the winds of change are blowing.
The people at the helm of the Texas government have had their hands full this last month. A slew of new bills have been introduced that directly address many of the issues that led to the unfortunate conditions millions were subjected to. On March 8th, Speaker of the Texas House of Representatives, Dade Phelan, announced that the following bills had been filed by the House Committee:
- House Bill 10: Dealing with reforming the ERCOT board.
- House Bill 11: Relating to extreme weather emergency preparedness and grid modernization/ weatherization.
- House Bill 12 : Implementation of an Emergency Alert system for extended power outages and chain of communication during emergencies.
- House Bill 13: Establishment of the Texas Energy Disaster Reliability Council.
- House Bill 14: Relating to the creation of the Texas Electricity Supply Chain Mapping Committee.
- House Bill 16 : Prohibition on the sale of wholesale indexed electricity to residential customers.
- House Bill 17: Relating to a restriction on the regulation of utility services and infrastructure based on the energy source to be used or delivered.
- House Bill 3138: States that a retail electric provider may not roll over a customer from a fixed-rate plan to a variable rate plan.
- Senate Bill 1012 : Relating to rate plans that allow switching from one rate structure to another rate structure no longer being offered to retail customers.
New bills addressing the state of the electric grid and industry reformation are still being filed on a near daily basis at the time of this writing, but of particular importance at this time to those concerned with energy management are the last four bills from the above list: residential customers may soon be outright restricted from purchasing energy at wholesale prices, and all other classes of customers will have additional restrictions placed upon them. Texas has long been proud of its deregulated market, but those days may be numbered.
A number of retail electric providers have already filed for bankruptcy after failing to make payments to ERCOT after the storm: notably among them is Griddy, who made national headlines when some residential customers started receiving energy bills as high as $17,000; and Brazos Electric, one of Texas’ oldest generation and transmission cooperatives.
In addition to all of the disruption amongst utilities, ERCOT itself, the ISO whose service territory includes 90 percent of the electric customers in the state of Texas, has seen a string of exits. CEO Bill Magness was terminated, 5 resignations came about from board members who were facing criticism for living out-of-state, and 2 additional board members resigned for undisclosed reasons.
The Public Utility Council of Texas, the Commission that oversees ERCOT’s operation and approves rates, has come under fire as well. It has had its numbers reduced to a sole remaining member: Arthur D’Andrea, who was appointed Chair by Gov. Abbott on March 3rd.
Between the public pressure, the overwhelming number of insurance claims, the billions in missed payments to ERCOT, the new legislature, and the reforming of the PUC and ERCOT, changes are undoubtedly on the horizon for the state of Texas. While necessary, keeping abreast of all the pertinent information and new energy rates that come about as a result can be a daunting task.
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