Regulator Testifies Electricity Overcharging During Fatal Texas Deep Freeze Was Pushed By Governor Abbott
from the whoops-you-froze-to-death-surcharge dept
U.S. infrastructure policy is treated as annoying and boring… until a crisis hits and suddenly everybody cares. As millions of Texans found out last year when the state’s energy infrastructure crumbled like a rotten old house under the weight of heating energy demands, leaving millions without power during a major cold snap. While the state engaged in a lot of performative nonsense in the wake of the breakdown, nothing much changed. Most of the state laws passed to “fix” the problem just punted any meaningful action down the road, while carving out big exemptions for natural gas companies that helped write the laws.
A year later and the gas companies that refused to upgrade and weather proof their infrastructure, still largely haven’t done so. What have they done? Well, late last year they decided to hit Texas natural gas customers with a major and obnoxious new $3.4 billion surcharge with the blessing of state regulators:
“Texans will be paying for the effects of last February’s cold snap for decades to come, as the state?s oil and gas regulator approved a plan for natural gas utilities to recover $3.4 billion in debt they incurred during the storm. The regulator, the Railroad Commission, is allowing utilities to issue bonds to cover the debt. As a result, ratepayers could see an increase in their bills for the next 30 years.”
Texas consumers had already experienced electricity price gouging during the tragic blackout. During the power outage and deep freeze, the price of electricity in Texas was pegged at $9,000 per megawatt hour, up from $50 per megawatt hour before the blackout. Initially, this was deemed the exclusive decision by the Electric Reliability Council of Texas (ERCOT). That decision is estimated to have resulted in ERCOT overcharging state electricity companies by an estimated $16 billion during the tragedy, costs that were obviously passed on to Texas business and residential consumers.
But in court last week, former ERCOT boss Bill Magness testified that the decision to keep Texas electricity prices unreasonably high during the outage came at the direct behest of Texas Governor Greg Abbott:
“The former head of the organization behind Texas’ electric grid testified in court on Wednesday that he was following Texas Gov. Greg Abbott’s orders when he directed power prices to remain as high as possible for several days during Texas’ winter storm blackouts in February 2021, the Houston Chronicle first reported.
The former chief of the Electric Reliability Council of Texas (ERCOT), Bill Magness, said that Abbott’s orders came at a time when power plants were already starting to turn back on again.
Texas is largely detached from federal utility regulations. Instead, wholesale power prices are determined by supply and demand. When demand is high, ERCOT allows prices to go up in the hope Texas power companies will add more electricity to the grid. In this case, pegging power prices at up to 150 times normal cost forced many companies to buy power at unreasonable rates, triggering financial collapse for the smallest. Including Brazos Electric Cooperative, which is suing ERCOT claiming that $1.9 billion in additional costs drove it into bankruptcy.
Abbott’s office had previously denied that the Governor was not “involved in any way” in the decision to keep prices maxed at $9,000 per megawatt-hour even after things started to normalize. ERCOT and Abbott justified the decision by claiming that lowering prices would have driven more users back on to an already strained grid. The problem is that weatherproofing systems to prepare for climate change would have prevented any of this from happening in the first place (hard to do when you insist climate change isn’t real). The other problem; Abbott and his ilk aren’t keen on things like consumer protection and tough regulatory oversight, which results in Texas consumers holding the bag when all is said and done since high costs are always passed on to consumers.
246 Texans died during the February 2021 freeze, the majority by hypothermia. And while Texas consumers have dodged a repeat so far, they also haven’t seen the same kind of sustained, lower temperatures yet that let to the 2021 grid collapse. It’s only a matter of time, and there’s not a whole lot of evidence anybody involved learned much of a lesson. Granted this same lesson isn’t going to be exclusive to Texas; as climate change runs face-first into the U.S. trifecta of infrastructure neglect, greed/corruption, and a general disdain for consumer protection and functioning regulators, outcomes are going to be similar across numerous states. Wash, rinse, and repeat until somebody actually learns something from the experience.