What would reversing $16 billion from winter storm mean for Texans’ electricity bills?

Was the $16 billion in charges to the electricity market during February’s winter storm an error that should reversed or a game-time decision intended to help Texans?

It’s a question at the center of political tension between state leadership, as officials on both sides contend they’re working in the best interest of consumers.

“It is clear to me there is a difference of opinion of whether there was a billing error or there was a deliberate decision to take action to save the lives of Texans in their homes,” Gov. Greg Abbott, a former Texas attorney general, wrote in a March 12 letter to his second in command, Lt. Gov. Dan Patrick. “That issue will ultimately be decided by courts.”

On Feb. 15, at the direction of the Public Utility Commission, the Electric Reliability Council of Texas increased its real-time electricity prices to the maximum limit of $9,000 per megawatt hour to encourage electricity generation amid scarce supply. But that $9,000 cap was kept for at least 32 hours after most outages ended on Feb. 17, according to a report from Potomac Economics, the commission’s independent market monitor.

Lawmakers in Austin have grappled with whether to reprice the billions in overcharges in recent days. Leading the opposing camps are Patrick in the Senate and House Speaker Dade Phelan, both Republicans.

The Senate went into hyperdrive and passed a bill calling for the rollback in just one day — a process that included filing the legislation, hearing it in committee and voting it out of the Senate in the span of hours. Phelan has cautioned against interference in the free market and has, so far, declined to take up the proposal at a pace satisfactory to Patrick.

“ERCOT and PUC failed Texas repeatedly during this tragic event, but the decisions made on pricing were made based on ensuring the reliability of the grid,” Phelan said in a Tuesday statement. “I believe these decisions may have saved lives.”

He added that, “repricing based on disagreement with PUC and ERCOT’s management decision is an extraordinary government intervention into the free market, which may have major consequences for both residential and commercial customers going forward.”

Patrick snapped back while on the Senate floor: “The Texas Senate stood for individuals. … The House stood for big business,” he said.

Experts say the issue being rushed through the Senate is a complicated one, and the winners and losers aren’t cut and dry.

“If people are due money, they need to be refunded their money, but we don’t need to create a situation where we put more companies in bankruptcy as a result of this, and create a mess on top of a mess,” said Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University.

But, as Patrick would say, “the clock is ticking” for action.

What does repricing mean for Texans’ wallet

State agencies and experts are split on what should be done about the charges. Potomac Economics has advised that the cost of energy be repriced for Feb. 17 and 18, when blackouts to help prevent a collapse of the power grid were no longer necessary but prices remained at the maximum rate of $9,000 per megawatt hour.

Carrie Bivins of Potomac Economics recommends lawmakers cap ancillary services prices — a term that encompasses functions provided by the electric grid that support the flow of electricity. Doing so could reduce costs to the public by nearly $1 billion, she said.

“That’s a direct impact that I feel comfortable saying reduces costs to consumers,” she said.

But PUC Chair Arthur D’Andrea, the sole remaining commissioner who resigned earlier this week but will stay in his role until a replacement is named, has advocated against repricing. Doing so could lead to new problems for customers and electricity providers who made complex, private transactions outside of the official power market, he said. D’Andrea’s resignation on Tuesday followed a Texas Monthly report that he told out-of-state investors who benefited from the storm that he has “weight of the commission in favor of not repricing.”

The bottom line is that the costs are likely to find their way to customers, experts say.

“This incredible volatility in the Texas electricity market does not benefit the consumer,” said Ed Hirs, a University of Houston Energy Fellow.

The impact would vary throughout the state, said Jay Zarnikau, who previously served as director of electric utility regulation at the Public Utility Commission of Texas. Factors include how providers hedged and whether consumers are in an area with competition or if they’re are on a fixed price plan or one that offers wholesale prices like Griddy.

He also noted that a handful of companies are already defaulting, such as Waco-based Brazos Electric Power Cooperative, which filed for Chapter 11 bankruptcy in an effort to shield customers from large bills following the storm.

“And when ERCOT can’t collect the money from those retailers or those cooperatives, those costs get socialized and everyone has to pay them. They get uplifted,” said Zarnikau, an adjunct professor at UT Austin and part-time consultant.

Doug Lewin, an energy and climate consultant, said it is good the Legislature is trying to find a way to “claw back” some of the money that moved around the week of the storm on behalf of consumers. But it is a complicated subject to tackle, and there seems to be some lack of understanding among lawmakers, he said.

“It’s kind of robbing Peter to pay Paul, and you’re not really sure who’s Peter and who’s Paul right now,” he said.

A ticking clock

Patrick wants lawmakers to reprice all $16 billion of the charges by the week’s end. The bill pushed by Patrick, Senate Bill 2142, was referred to the House’s State Affairs committee Thursday, but a hearing date hasn’t been set. The legislation would also have to pass on the House floor and get Abbott’s approval.

ERCOT has an internal deadline of 30 days to finalize trades, D’Andrea said on the call obtained by Texas Monthly. But with no meetings scheduled for the rest of the week and D’Andrea’s resignation, it’s unclear whether repricing can be feasibly addressed by the commission.

With the House having adjourned for the week, Patrick on Thursday called on Abbott to take corrective action independently, an authority that Abbott has said he doesn’t have.

“The only entity that can authorize the solution you want is the legislature itself,” Abbott said in the March 12 letter.

At the request of Patrick, Attorney General Ken Paxton weighed in and found that the PUC has the authority to direct ERCOT to correct prices for wholesale electricity and ancillary services.

“I’m not a lawyer, and I’m certainly not a constitutional lawyer, but it’s unclear to me whether you can retroactively go back … and change a price that is something from the past,” said Bullock of SMU. “That’s likely to wind its way through the courts for quite awhile.”

If Abbott doesn’t reverse the prices, Patrick offered another option for the governor: Direct ERCOT to notify market participants that the prices are under investigation. This would allow further review of the prices to continue and give the House more time to vet repricing, Patrick said.

“This will be worked out in court, but that may take years,” Patrick said .”Right now, before we get further down the road, we need to look at saving $4 to 5 billion for Texas ratepayers.”

If action isn’t taken this week, then the Senate’s bill will have been for naught and the issue is “unfortunately ended for the rate payer,” Patrick said.

Staff Writer Haley Samsel contributed to this report.