A view of a high-voltage transmission tower in Houston, Texas, on Feb. 21, 2021. The week before, winter storm Uri hit the state and disrupted coal, natural gas and nuclear power plants. It left millions of people without power and heat.
Texas was hit by a historic winter storm last month that left millions without power for several days. After the storm, many people received sky-high electricity bills. The regulator overseeing the grid operator explained that the Electric Reliability Council of Texas, or ERCOT, which operates the grid and manages the scheduling of the wholesale electricity market, made a serious mistake and overcharged $16 billion during the period.
Citing Potomac Economics, an independent market monitor in Texas, Bloomberg reports that ERCOT set the maximum rate at $9,000 per megawatt-hour, resulting in a massive overcharge from 12 a.m. Feb. 18 to 9 a.m. Feb. 19.
The company sent a letter to regulators recommending that the tariff be corrected and that the $16 billion in overcharges be eliminated.
Several utilities, including EDF Renewable Energy and Just Energy, have also asked the Public Utilities Commission to reprice, while others have asked regulators to forgo payments until the issue is resolved.
“If we don’t take action to stabilize the situation, the worst thing that can happen is people will get in trouble,” Carrie Bivens, vice president of Potomac Economics, told Bloomberg. “It’s going to have a cascading effect.” The cascading effect (cascading effect) is the effect of one action affecting the system and causing a series of unexpected events to occur.
In February, Polar Storm Uri hit Texas, knocking out the state’s power grid, plunging more than 4 million homes and businesses into darkness for days, killing dozens of Texans in record freezing temperatures; pushing many companies to the brink of bankruptcy and putting pressure on the electricity market.
“The market is under considerable stress.” ERCOT Vice President of Commercial Operations Kenan Ogelman told Texas congressmen Thursday (March 4).
The electricity market is facing a payment shortfall of more than $2.5 billion. One utility, Brazos Electric Power Cooperative, has filed for bankruptcy; retailers Griddy Energy LLC and Entrust Energy Inc have been barred from participating in the market for defaulting on their contracts.
Griddy is also being sued for “illegal price fixing” and is being asked to pay $1 billion in damages for issuing “sky-high” electricity bills to customers.
Four members of ERCOT’s board of directors were censured for not living in the state during the storm and handling the outage, and resigned as a result.
Moody’s Investors Service downgraded ERCOT’s rating by one notch to Aa3 from A1.
The utility commission on Wednesday adopted an earlier recommendation from the market watchdog, voting to recoup some payments to generators for services they never actually provided during the energy crisis. Commissioners also expressed support for capping prices for certain grid services. This was requested by some retailers, but no action has been taken on it.
The commission is scheduled to meet again on Friday.
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