Regulator Testifies Electricity Overcharging During Fatal Texas Deep Freeze Was Pushed By Governor Abbott

Failures

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.

Filed Under: energy prices, ercot, greg abbott, texas

Texas Gas Companies Hit Texas Consumers With 'Whoops You Froze To Death' Surcharge

News

from the frozen-to-death-surcharge dept

If you hadn’t noticed, the United States isn’t really prepared for climate change. In part because corporations and disinformation mills have convinced countless Americans a destabilizing climate isn’t actually happening. But also because we were already perpetually underinvesting in our core infrastructure before the symptoms of an unstable climate began to manifest. It’s a massive problem that, as John Oliver highlighted six years ago, doesn’t get the same attention as other pressing issues of the day. You know, like the latest influencer drama or the mortal threat posed by TikTok.

Infrastructure policy is treated as annoying and boring… until a crisis hits and suddenly everybody cares. As millions of Texans found out earlier this 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.

Fast forward nine months and the natural gas companies that refused to upgrade and weather proof their infrastructure, still largely haven’t done so. What have they done? Well, recently 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.

So not only did Texas regulators not hold local energy utilities and frackers accountable for not weather proofing their infrastructure after decades of warnings, they’re happily signing off on a plan to let them punish consumers for their own incompetence. The dysfunction runs parallel with similar dysfunction in the telecom sector, where companies routinely fail to adequately invest in their networks, yet still somehow punish their captive customers and taxpayers with the blessing of local regulators who rarely hold them accountable for anything. The big difference of course: a broadband outage (usually) won’t kill you.

Granted the dysfunction in Texas doesn’t just impact Texans. The regulatory corruption and incompetence has a ripple effect on things like natural gas prices, which impacts users in other states as well, as Katie Sieben, chairwoman of the Minnesota Public Utility Commission, told The Washington Post back in April:

“The ineptness and disregard for common-sense utility regulation in Texas makes my blood boil and keeps me up at night,? Katie Sieben, chairwoman of the Minnesota Public Utility Commission, said in an interview. ?It is maddening and outrageous and completely inexcusable that Texas?s lack of sound utility regulation is having this impact on the rest of the country.”

This kind of infrastructure corruption and dysfunction is nothing new (again, just look at US telecom, rail travel, or countless other sectors). But climate change is one arena where state/federal corruption and our propaganda problem has congealed into something particularly nasty. It’s not clear how many mass-fatality events we have to live through before we embrace meaningful corruption, lobbying, and regulatory reform, but it’s apparently going to be a significant number, as America remains utterly allergic to learning anything from history or experience.

Filed Under: climate change, energy prices, surchargers, texas