Electricity bill of $ 17,000? Deregulated power grid leads to sky-high prices for Texans

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Topline

The downside of an independent energy market has left millions of Texans without power for days and now scares some residents with five-figure energy bills, as Texas lawmakers seek to investigate the failures the only state-run electricity network.

Highlights

Texas residents use social media with screenshots massive electricity bills they rack up as a result of an unusual multi-day cold spell, with some Texans supposedly facing bills as high as $ 17,000, even before the billing period ends.

These sky-high bills come after the Texas Utilities Commission, which regulates the tariffs for Texas utilities, held an emergency meeting with the state’s electricity grid operator, the Electric Reliability Council of Texas. (ERCOT) on Monday to raise energy prices in order. to reflect the supply constraints induced by increased demand during the winter storm.

The resulting resolution helped push energy prices up to the limit of $ 9,000 per megawatt hour for about five days, or 180 times the average hourly rate before the storm, Reuters reported.

In anticipation of the price spike, Griddy, an electric utility 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 an increase in energy prices.

Prices have since fallen by around 90%, according to ERCOT data, but Texas Governor Greg Abbott (right), who called for an investigation into ERCOT for his handling of the weather crisis, reportedly said that the state would take measures to relieve residents affected by the sharp rise in prices.

ERCOT did not immediately respond to a TBEN request for comment on Saturday, in part on the number of customers affected by the rate hike, but most Texans have fixed-rate electricity plans that have not been affected by the price hike, the Dallas Morning News reported.

Key context

Texas is the only state in the country to operate its own power grid, and because key operations are confined to state borders, ERCOT operates efficiently without direct federal oversight (thanks to the Federal Power Act signed by President Franklin D. Roosevelt in 1935). This leaves it to the Texas Utilities Commission to regulate prices in conjunction with ERCOT. While the arrangement saved energy costs, it also means that ERCOT, which manages around 90% of the state’s electrical load, cannot access the necessary capacity of the other two grids. country in case of emergency. Before the storm, ERCOT underestimated the amount of power it would need to cope with the cold conditions, forcing the grid to “rely on costly and quick-response replacement generation,” Griddy explains, and a ultimately left millions of people without power for days.

Crucial quote

“When briefed, the commissioners agreed that system-wide energy prices, which reached as low as around $ 1,200 on the first day of the weather crisis, were inconsistent with the fundamental design of the ERCOT market, ”the Texas Public Utility Commission said Monday. “Because energy prices must reflect scarcity of supply, the market price of the energy needed to service the load being shed in the face of scarcity is also expected to be at an all-time high.”

Tangent

“Friends of Texas – WITHDRAW YOUR AUTO-PAY ELECTRIC BILLS,” a Twitter user wrote Friday, noting that his bill was already 8 times the normal monthly charge with 25 days remaining in the bill cycle. “I sat in the dark and barely used my heat. We must demand relief for these bills. It’s so criminal and evil.

Surprising fact

In their last meeting before the snowstorm, senior ERCOT officials spent just 40 seconds discussing the approach of the cold front and the organization’s readiness, the Austin statesman reported.

To monitor

Texas lawmakers will hold a joint hearing Thursday to discuss the reliability of the state’s grid and the conditions that have led to massive price hikes. State Representative Donna Howard (R) says Texas House should address the impact of deregulation on Texas utilities.

Further reading

Griddy Customers Face $ 5,000 Electricity Bills During 5 Frosty Days in Texas (Dallas Morning News)

The two hours that nearly destroyed Texas’ power grid (Bloomberg)

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