Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Texas electricity regulator under pressure to slash winter storm bills

Stock MarketsMar 03, 2021 05:30AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
3/3 © Reuters. FILE PHOTO: Winter weather caused electricity blackouts in Houston 2/3

By Gary McWilliams

HOUSTON (Reuters) - The Texas electricity regulator meets Wednesday for the first time since a devastating winter storm fueled a financial crisis in its power market, amid calls to slash billions of dollars from costs facing businesses and consumers.

The storm temporarily knocked out up to half the state's generating plants last month, triggering outages that killed dozens and pushing up power prices to 10 times the normal rate. About $47 billion in higher costs is threatening the companies that sell, transmit or generate electricity in the state. Consumers will see higher prices as the costs are passed along.

Power marketers that sell electricity want the state's Public Utility Commission to reduce, suspend or rescind fees for ancillary services such as standby power that they are required to pay, though in some cases the services were not provided during the blackout. According to one power marketer, those fees ballooned from $37,000 to $19 million for the week of the storm.

The Independent PUC adviser Carrie Bivens this week recommended cuts that could shave about $2 billion from service fees, though she provided no estimate of the total.

Rules designed to encourage more power during emergencies pushed wholesale prices to $9,000 per megawatt hour (mwh) and led to $25,000 per mwh service fees. The average U.S. home uses about 900 kilowatt hours per month.

One of Bivens' recommendations would shave two-thirds off the fees charged marketers for the routine services. Another would reverse the fees paid to the generators that failed to provide services during the storm. If left in place, the fees could force out a quarter of the state's about 100 providers and concentrate up to 80% of the market among three large utilities.

"There could be a number of retail service providers who aren't able to remain in business if ERCOT does not relent on the demand for payment," said Catherine Webking, an attorney who represents companies seeking fee cuts.

It is unclear how the PUC will act. It supervises grid operator Electric Reliability Council of Texas (ERCOT), which acts as a clearinghouse, collecting money from electricity sellers and paying those that produce the electrons. It is facing a $2.46 billion shortfall from companies that have not paid their bills. ERCOT on Monday said it would begin naming businesses that have failed to pay and disclose the amounts each owed.

ERCOT's plan to name and shame scofflaws "is perfectly fair game," said Patrick Woodson, chief executive of ATG Clean Energy, who said his company is unscathed. However, he added: "I hope they will apply the same standards to identifying the market participants who made massive profits during this disaster."

The crisis claimed its first victim Monday when Brazos Electric Power Cooperative Inc, whose members provide power to about 660,000 in the state, filed for bankruptcy after receiving bills for $2.1 billion from ERCOT.

Texas electricity regulator under pressure to slash winter storm bills
 

Related Articles

Down 60% Since Going Public, is Poshmark a Buy?
Down 60% Since Going Public, is Poshmark a Buy? By StockNews - Apr 13, 2021

Poshmark (POSH), a fashion social marketplace, is down almost 60% since its offering. The company is well known for its new and used apparel, but is it worth buying on this massive...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (4)
Rick Baier
Rick Baier Mar 03, 2021 7:07AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The plants were warned to install heat tracing equipment on their transmitters and other vital equipment years ago.
CrackHead Bob
CrackHead Bob Mar 03, 2021 6:17AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I am short ETR, this could be a $5 stock from mid 80's of they are on that default list Monday. This reminds me of how being short PCG paid off BIG TIME!
Art Fire
Art Fire Mar 03, 2021 5:43AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Texas is a mess. First it can't manage a simple storm because their governor puckers at the teet of poorly run energy companies there then the governor tells everyone to remove their masks. How many have to die before you realize they are completely incompetent
Bob Ruckle
Bob Ruckle Mar 03, 2021 5:28AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Use the 1.9 trillion China virus relief bill to pay for it.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email