As Texas melts due to a winter storm that has resulted in sky-high electricity bills for customers, state and federal lawmakers are rushing to find a way to offset the costs. As customers owe billions of dollars, it’s not clear who will be left in the bag.
“We all pay for it in some way, that is, taxpayers, shareholders, or customers,” said Michael Webber, a professor of energy at the University of Texas at Austin. “But it will take a few months for the details to come out.”
Gov. Greg Abbott announced last weekend that the State Utilities Commission had imposed a moratorium on disconnecting customers due to non-payments to deal with excessive bills and met with lawmakers on how the state could help reduce consumers ’electricity costs.
Last week, President Joe Biden approved a statement from Texas on a major disaster providing federal assistance for temporary home and apartment repairs. R-Texas representative Michael McCaul told CNN over the weekend that the plan is to provide federal assistance for building damage and cover the cost of electricity bills.
San Antonio Mayor Ron Nirenberg said in an interview with CNN on Sunday that “hell will be the paycheck” if residents are expected to pay the bill for soaring electricity costs.
“It would be unconscious for the bills to go up and the bills to be put on the backs of residents of a state who suffered and froze in their homes last week, through no fault of their own,” Nirenberg said.
As temperatures dropped below freezing, demand for electricity increased, raising the wholesale price of electricity to $ 9,000 per megawatt hour. Typically, the seasonal average is $ 50 per megawatt hour. The Texas Electricity Reliability Council, or ERCOT, which handles about 90 percent of the state’s electrical load, and the state’s electricity producers were unprepared for the ice storm. They could not produce energy to meet demand – a critical part of what makes Texas ’free market electricity network work.
Electricity bills for Texans who opted for a tariff plan that varies with wholesale prices have crawled more than tenfold. Royce Pierce, who owns a three-bedroom house in Willow Park, west of Fort Worth, said his monthly electricity bill was $ 17,300. It is usually about $ 150 a month. Last week, his wife closed the bill, which is automatically billed by wholesale electricity provider Griddy because it was canceled, Pierce said.
“I sent them an email and said,‘ I can’t afford that. What should I do? What are we able to do? “We said.” We have teenage children and we still have other expenses.
In Texas, state wholesale electricity prices are used with “extreme scarcity” to encourage power producers to produce more energy, according to the state utility committee. Prices are paid by wholesale buyers and producers who did not buy energy prematurely to cover their risks, which is a penalty for producers who do not produce electricity. But in last week’s winter storm, these prices were passed on to consumers.
“A lot of conservative economists will say,‘ That’s good. We want discipline, easy entry, easy exit. “If someone isn’t well covered, they don’t belong in the market,” said Jay Zarnikau, former director of electricity regulation at the Utilities Commission. “On the other hand, it has two big competitors and is likely to survive as the smaller retailers they run into problems go out of business – so you will have a greater concentration.”
The dramatic surge in electricity prices over the past two decades has already pushed about 20 companies into bankruptcy, leaving a handful of dominant players, including NRG Energy and Vistra, said Zarnikau, an economist at the University of Texas at Austin Lyndon Bi today. Johnson Public School.
In recent days, Canadian energy retailer Just Energy has said it could be in trouble to cover the storm’s $ 250 million weather-related costs. Dallas-based Atmos Energy Corp. said it was considering raising cash after spending $ 3.5 billion to buy fuel during the storm.
“Absolutely, some companies are going bankrupt,” said Edward Hirs, an energy associate at the University of Houston. “Some consumers will be at a disadvantage because they have to move to providers that cost more – and trust me, they’re just waiting for them.”
As Texans patch up breaking aqueducts and mourn deadly dozens, people on the ground aren’t sure when help will arrive for their installation bill. Amanda Powell, a lawyer at Lone Star Legal Aid, said the nonprofit is focused on providing accurate information to residents who may seek help from the Federal Emergency Management Agency to cover damage to their homes.
“We need to see if they provide any utilities,” Powell said. “What the answer is going to happen, we just don’t know. I’ve never seen anything like it.”
Four members of ERCOT’s board of directors announced on Tuesday that they intend to resign. The chairman and vice-chairman of the board, together with two other members of the board, issued a joint statement stating that their decision was aimed at “ensuring the free hand of state leaders in managing the future and eliminating distractions”.