News25 Investigates


25 Investigates: A deep dive into ERCOT's biggest changes

Posted at 2:10 PM, Aug 12, 2021
and last updated 2021-08-13 15:48:53-04

HOLLAND, Texas — When Texans ended up with power bills in the thousands during the Texas Deep Freeze, government leaders promised to help.

Last week 25 Investigates looked at the changes made by Texas Lawmakers, the Governor, the Public Utilities Commission and ERCOT, to our power grid to prevent a return of the problems we saw during the Texas Deep Freeze.

But two of the biggest items, re-making the Texas energy market and the consumer bailout that was promised, need more explaining.

We start our deep dive into the plans with a visit to the town hit the hardest by the freeze.

As you approach the town of Holland from almost any direction, the first thing you notice, Holland looks like an oasis of trees surrounded by cornfields along the Texas prairie.

When the Texas Deep Freeze hit, those trees that provide all that greenery and shade, turned into the town's Achilles' Heel.

It took weeks to remove all the threats to life and property here.

That may help you understand, why people like Doug Moon, remain so skeptical about the proposed fixes to the Texas power grid.

The grid that people in Holland say, failed them.

"I heard about ERCOT's changes. You never know the results of anything until there's an issue, and you find out what comes about it. It'll be the next ice storm before we figure out if this is right or not, if there is one," he said.

When Texas deregulated its energy market, price took priority.

The state always took the cheapest route, against the advice of the most respected economist in Texas.

"One of the things, when the system was originally designed 20 years ago, that I pointed out to them at the time was if you don't have an incentive, for people to have power standing by in case you need it, it's not going to happen," explained Dr. Ray Perryman, of The Perryman Group.

The Texas Deep Freeze proved him right.

Texas turned to panic pricing but that didn't work because the producers themselves, paralyzed by the freeze, had nothing to buy so the market collapsed.

"And so that's why we're redesigning the entire thing from scratch," said Peter Lake, Public Utilities Commission Chairman.

A new market will focus more on having that emergency power in reserve but that's not free, so they have to figure out a way to pay for it.

"There's a myriad of possibilities in changing how generators are paid for producing electricity in Texas to adding new financial products that reward liability to allocating costs differently," said Lake.

As critics point out, this means Texas has learned the cheapest way is not always the best way.

"Up until now, they have been very resistant to pay generators to have capacity that we don't use all the time. Now we're moving more towards pay let's pay for a little extra so that we know it's there when we need it," said Casteñeda, a Dallas-based Energy Attorney & Engineer.

That actually means something to the people of Holland, who had to literally dig themselves out of the ice that paralyzed the town.

No place in Texas got hit harder in the Texas Deep Freeze than the town of Holland.

It's a small town with limited resources in a state that was totally unprepared for that kind of weather so they had a big problem on their hands.

Folks here say they got no outside help in dealing with it except volunteers, like a group from Iowa.

You could see it in posts on social media how most of the work to get Holland up and running again came from neighbors helping neighbors.

We might not get as good a break in this re-designed energy market, that even ERCOT and the PUC admit, they don't fully understand because they have yet to design it.

But they want to stress two very important points.

"The lights are going to stay on and your bill should not change," promised Lake.

But there's one problem.

"What does this look like in practice? We don't know yet," Lake added.

But the PUC and ERCOT do make this pledge.

"We don't want to raise costs and we don't expect that we will raise cost. We're just shifting the payments to the generators that provide the most reliable electricity in the most accountable manner," said Lake.

That promise could prove hard to keep because of that old saying, "you don't get something for nothing."

ERCOT promises to keep Texans informed of its progress.

"We intend to show to you, each month, at the beginning of every month, where we are on those initiatives and provide you evidence of how we've completed each of those items," said Brad Jones, Interim head of ERCOT.

In the meantime, Doug Moon says he does have some sympathy for those who presided over this mess, but he's not sitting on his hands when it comes to next winter.

"Am I gonna do anything different to prepare for next year? I bought a generator but other than that, I'm sure nothing's gonna happen for the next 20 years but who knows, we'll find out what happens," he said.

But others say that's how we got into this mess in the first place.


At the time many thought we'd all pay extra through our electric bills or our taxes but instead, lawmakers came up with an easy installment payment plan.

25 Investigates found, affected customers don't exactly like it because they say it has a tendency to serve politics and special interests as much or more than the people with the big bills.

"It was, it was horrible. It was simply horrible nobody could go anywhere or do anything," recalled Lisa Adams of Holland

Adams says the Texas Deep Freeze added insult to injury when the power bill came due.

"We didn't have electricity for eight days, but we still got charged like we had it twice over," she said.

Lots of folks saw bills that doubled, tripled and more.

Russell Devorsky, lost $6,200 as a customer of a spot energy supplier called Griddy.

"I was paying a nickel a kilowatt-hour. It went from a nickel to $9 and the second the $9 mandate expired at midnight, it went to negative six cents," said Devorsky.

Texas artificially raised prices to coax more juice into the power lines and left the price there for three days.

A watchdog agency says it resulted in 16 billion in overcharges.

At first, government leaders promised a rescue which many took to mean bill forgiveness.

”Texans should not be subjected to skyrocketing energy bills, due to due to a spike in the energy market," said Gov. Greg Abbott.

"Clearly the PUC Chair has the power to correct the pricing," said Lt. Governor Dan Patrick.

Most thought Texas would make wall street take a loss on paper but bond money provides the oil that keeps the Texas economy rolling.

The state's leaders came up with a rescue plan.

But instead of a bailout, those on the hook for outrageous bills got an installment payment plan designed to get power companies their money.

While the bond market holds the note and makes its cut as customers write a check for a little extra each month.

It's all contained in House Bill 1520 which the Governor signed into law.

Devorsky says the payment plan is too little too late.

"Instead of taking all the money from me at once. I'll let you make 200 payments. That's like going to a Johnny repo car lot in $1 A down on $1 a day for the rest of your life. That doesn't fix anybody's problem," said Devorsky.

Political experts call bailouts unpopular even in this case.

Economist Dr. Ray Perryman says the loan plan pays the power companies, gets taxpayers mostly off the hook and gives those affected, some breathing room which making it the best option.

"Especially in a state like Texas where you have the type of government that has to recoup that revenue in some way. So one way for another consumers were going to end up paying for it. The long-term bond situation is a good way to handle this because it puts the full faith and credit of the state behind the bonds which gives them a very attractive interest rate," said Perryman, of The Perryman Group.

But did the Governor do power companies a favor, getting them paid faster, as payback?

The Associated Press found the energy business that failed us put $26 million in the governor's pocket, making up more than 17% of his $150 million political fund.

The governor's people say, he stays independent of his donors.

Devorsky says, the Capitol chose big business over the little guy.

"They choose Wall Street over working Texans and let working Texans die. So the Wall Street bankers could rake in billions," he said.

Lisa Adams and others shake their heads and call it the kind of insider business that got voters to send Donald Trump to drain the swamp and later storm the U.S. Capitol.

All the government had to do, they say, was keep the disaster from getting so bad in the first place.

"I would have liked to have seen everybody's power bill not be so high because I know that, you know, it just went skyrocketed," she said.

Adams and others say it adds to their mistrust of politicians in general for letting it happen and for coming up with a payment plan that benefits big political donors.


Austin has been buzzing with the many changes ahead for ERCOT and the Public Utilities Commission, as a result of the Texas Deep Freeze.

25 News investigates found, some of those changes favor politicians, while critics say they neglect a key part of their jobs.

Russell Devorsky went to work as a teenager and later bought the business that employed him and later went on to become mayor of his hometown.

He says you don't get that kind of track record without some advance planning something. He also says Texas leaders failed to do ahead of the Texas deep freeze making a bad situation, worse.

"700 People froze to death in that storm. Firing everybody and leaving the same policies in place, it changes nothing,"

But if you listen to the talk down in Austin, the air is filled with change.

Changes in ERCOT's board of directors will give the state's top politicians, more say, and the agency that regulates it, less.

The Governor, Lieutenant Governor, and the House Speaker will pick five people to serve on ERCOT's board. That's one-third of its make-up.

Critics say it will do almost nothing to help the power grid, but Devorsky says it will help politicians.

"Instead of having one target saying it's all the governor's fault they will now say it's the speaker's appointment did that the Lieutenant Governor's appointment did it or the governor's appointment. It gives them more political coverage and less accountability," he said.

Meantime, the wheels of big government have started turning on the new Texas energy market.

"The Public Utility Commission is taking robust action to implement this legislation. We have 30 rulemaking projects underway which is unprecedented in the recent history of this agency," said Peter Lake, Chairman of the Texas Public Utilities Commission.

And while the thought of more regulation upsets some in politics, experts say some rules we can't do without.

"We've already got regulation, we've got poorly functioning regulation, we've got regulation that says do one thing when we needed something different than what happens so it's not a question of regulation yes or no, it's a question of the right regulations to make sure that our grid is reliable," said Dallas-based Attorney/Engineer, Chrysta Casteñeda.

She says, Texas leaders' poorly-designed power market, a market which economists warned them about, made a bad situation worse.

"But I think the Governor's job was to see what was coming and make sure he was communicating the right priorities and I don't think that happened," said Casteñeda.

She says Texas spins its wheels working on a ten year old problem, while the state needs to create a better plan for the futrure, especially as we have as many as 1,600 people a day moving here by some estimates.

"We got to have a grid that's going to support all that increased demand. Somebody is capable of planning for this if we just have the right somebody in the right place, and we get the power to do."

We need an agency that can plan for the future, see what our needs are going to be in the future and how do we provide for those resources," said Casteñeda.

Devorsky agrees.

He says, many big politicians these days like their friends on wall street and look only to the end of the quarter for results.

"We don't have people looking out for our kids or our grandkids," he said.

He says such short-term thinking leaves us short.

"The Statesman will do what's the right thing, and will do it for your grandkids politician is going to do what sounds good for today, and what to put a vote in his pocket tomorrow," said Devorsky.

He says fixing that will go a long way, to fix ERCOT and many, many other problems too.