Texas’s top utility regulator said that an independent market monitor has substantially revised a recommendation to reprice $16 billion worth of electricity charges stemming from last month’s blackouts, lowering it to around $3 billion.
Arthur C. D’Andrea, the chairman of the Public Utility Commission of Texas, told state lawmakers Thursday that the monitor recently walked back an estimate that the Texas power grid operator had overcharged to the tune of $16 billion during a cold snap that caused a surge in electricity prices.
The monitor has revised that number to $3.2 billion, Mr. D’Andrea said. The reasoning wasn’t immediately clear, and the monitor, Potomac Economics, said it was still working on an official filing spelling out its decision.
The disclosure came during a Texas House committee hearing in which lawmakers asked Mr. D’Andrea to explain his position on whether the prices should be revised. The utility commission has faced mounting political pressure in recent days, with Texas Gov. Greg Abbott, Lt. Gov. Dan Patrick and most of the state senate publicly calling for repricing.
Amid the freeze, the three-member public utility commission, appointed by Mr. Abbott, ordered the Electric Reliability Council of Texas, the state’s grid operator to raise wholesale power prices to the peak price of $9,000 per megawatt hour. The independent market monitor, which reports to the utility commission, said in a report last week that Texas kept wholesale prices artificially high for more than 30 hours longer than necessary, creating at least $16 billion in overcharges.
Mr. D’Andrea earlier indicated that he was opposed to repricing and reiterated that position Thursday, saying that such a move would be inordinately complicated and comparing it to unscrambling an egg. Repricing, he said, had the potential to create unforeseen problems by clawing back money from power generation companies and electricity cooperatives.
“Right now, we know who is hurt, and we know who is not,” he said. “There is a certain ‘devil you know’ aspect of not repricing.”
Mr. D’Andrea is currently the commission’s only sitting member. Former commissioner Shelly Botkin resigned Monday. DeAnn Walker stepped down as chairwoman earlier this month after state lawmakers called for her ouster.
Market participants are deeply split over whether the utility commission should reprice the market, with some expressing concern that such a dramatic state intervention would repel investors.
Daniel Hudson, chief executive officer of Temple Generation I LLC, which owns a 750-megawatt natural gas plant in central Texas, warned that repricing would lead to a loss in faith in the Texas power market, which is widely known by its acronym Ercot.
Following the market monitor’s suggestions “would have a chilling effect on investment in the Ercot market at the most critical time in its 20-year history,” he said in a filing with the utility commission.
Houston residents took shelter at a furniture store during the weather crisis last month.
Photo: Go Nakamura/Getty Images
Write to Katherine Blunt at [email protected] and Russell Gold at [email protected]
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