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Local utilities forced to cover millions due to ERCOT's inflated prices during Winter Storm Uri

Posted at 7:08 PM, Mar 12, 2021
and last updated 2021-03-12 23:53:30-05

COLLEGE STATION, TX — College Station Utilities is now forced to possibly front $48 million in costs due to power over charges, which they suspect is an error by the Electric Reliability Council of Texas (ERCOT) and Public Utilities Commission of Texas (PUC).

ERCOT has been under fire for various reasons since Winter Storm Uri. Now a clearer picture has been painted for the financial impact their decision-making is having on local utility companies.

According to Wesley Gray, the assistant director at College Station Utilities, during the storm, the market price for the cost of reserve energy rose. This was due to demand, but also because ERCOT was artificially changing prices when they no longer needed to. Prices went as high as three times the market price.

”From a utilities standpoint, we don’t think that that was fair because everybody thought that the maximum, they can charge by statue was the $9,000,” Gray explained.

Many are questioning why the prices were still inflated even as the rolling blackouts ended. According to experts, ERCOT held inflated market prices as a safety net.

“The last 36 hours, so half a day Thursday into Friday, and then carry on into the weekend that those are hours that we the price was probably higher than the market would bare,” Gray added.

Now the City of College Station is looking at paying at least $48 million to contribute to the $16 billion deficit ERCOT and the Public Utility Commission of Texas is facing.

”The City has been building up what's called a reserve account," explained Mary Ellen Leonard, the Director of Physical Services for the City of College Station. "So money that has been set aside in case there was some kind of winter- well weather emergency.”

The City of College Station is only aware of this estimated bill. As of now, customers should not be expecting a rise in their rate, but that could change if charges continue to pile up.

As for Bryan Texas Utilities, they are now responsible to cover $27 million in costs. The price is not as high for them since they also generate their own power.

”We are fortunate the we have enough working capital that we’ll be able to absorb this without having any rate increase to customers,” said Joe Hegwood, the Chief Financial Officer for the City of Bryan.

The City of Bryan believes these charges are inaccurate and will pay the bill but continue to dispute it, along with state leaders.

”The governor directed the legislature to take a look at the pricing and evaluate, 'Hey, was it fair or unfair?' As well as the PUCT to evaluate whether or not that ERCOT pricing was fair and when it should have ended,” said Gray.

State lawmakers and Governor Abbott have requested and will continue to push for ERCOT and the Public Utilities Commission to reverse their $16 billion power over charge.

According to the Wall Street Journal, the Texas Senate sent a letter to the Public Utility Commission of Texas, urging them to fix the error. This conversation will continue in the legislative session until they reach a mutual agreement.