The downside of an independent energy market left millions of Texans without power for days and is now spooking some residents with five-figure energy bills, as Texas lawmakers look to investigate the failures of the nation’s only state-operated power grid.
Texas residents are taking to social media with screenshots of the massive electric bills they’re racking up in the aftermath of an unusual, days-long coldspell, with some Texans reportedly facing bills as high as $17,000–even before the billing period has ended.
Those sky-high bills come after the Public Utility Commission of Texas, which regulates Texas utility rates, held an emergency meeting with the state’s electric-grid operator, the Electric Reliability Council of Texas (ERCOT), on Monday to raise energy prices in order to reflect supply constraints driven by heightened demand during the winter storm.
The resulting resolution helped hike up energy prices to the limit of $9,000 per megawatt hour for about five days–180 times the average hourly rate before the storm, Reuters reported.
In anticipation of the surge pricing, Griddy, an electric company that provides the variable-rate plans affected by the increase, urged its nearly 30,000 customers last Saturday to switch energy providers if they couldn’t afford increased energy rates.
Prices have since come down about 90%, according to ERCOT data, but Texas Governor Greg Abbott (R), who called for an investigation into ERCOT for its handling of the weather crisis, has reportedly said the state will take steps to provide relief for residents affected by the severe price surge.
ERCOT did not immediately respond to a Forbes request for comment Saturday, in part about the number of customers affected by the increased rates, but most Texans have fixed-rate electric plans that were unaffected by the surge pricing, the Dallas Morning News reported.
Texas is the only state in the nation that operates its own electrical grid, and because key operations are confined within state lines, ERCOT effectively operates without direct federal oversight (thanks to the Federal Power Act signed by President Franklin D. Roosevelt in 1935). That leaves the Public Utility Commission of Texas to regulate prices in collaboration with ERCOT. Though the arrangement has helped save on energy costs, it also means ERCOT, which manages about 90% of the state’s electrical load, can’t access necessary capacity from the two other grids in the country in the case of an emergency. Ahead of the storm, ERCOT underestimated how much power it would need to deal with the cold conditions, causing the grid “to rely on fast-responding, expensive replacement generation,” Griddy says, and ultimately leaving millions without electricity for days.
“When notified, the commissioners agreed that energy prices across the system clearing as low as approximately $1,200 during the first day of the weather crisis was inconsistent with the fundamental design of the ERCOT market,” the Public Utility Commission of Texas said Monday. “Because energy prices should reflect scarcity of the supply, the market price for the energy needed to serve load being shed in the face of scarcity should also be at its highest.”
“Texas friends-TAKE YOUR ELECTRIC BILLS OFF AUTO-PAY,” one Twitter user wrote Friday, noting that her bill was already 8 times the normal monthly charge with 25 days still left in the billing cycle. “I sat in the dark and barely used my heat. We need to demand relief for these bills. This is so criminal and evil.”
At their final meeting before the snowstorm, top officials at ERCOT spent just 40 seconds discussing the approaching cold front and the organization’s preparation for it, the Austin Statesman reported.
What To Watch For
Texas lawmakers will hold a joint hearing Thursday to discuss the reliability of the state’s grid and the conditions that led to the massive price hikes. State Rep. Donna Howard (D) says the Texas House should address the impact deregulation has had on Texas utilities. ERCOT is set to testify.
Griddy Customers face $5,000 electric bills for 5 freezing days in Texas (Dallas Morning News)