Texas utility regulators stand pat on overcharges

AUSTIN, Texas — Texas utility regulators have rejected a recommendation that they reverse about $16 billion in overcharges for wholesale electricity that were racked up during the failure of the state’s utility grid last month because of a pricing error by the grid’s operator.

“It’s just nearly impossible to unscramble this sort of egg,” Arthur D’Andrea, the new chairwoman of the Public Utility Commission, said during a commission meeting Friday.

Potomac Economics, a Virginia-based firm that’s paid by the state to provide an arm’s-length assessment of the Texas power grid, recommended Thursday in a letter to the commission that the overcharges — which were billed to retail electric providers, distributors and others — be reversed by retroactively lowering wholesale electricity prices over a 32-hour period beginning Feb. 18.

The Electric Reliability Council of Texas oversees the state’s power grid. An independent grid monitor has said a pricing error by the agency during the recent weather emergency ended up resulting in $16 billion in overcharges for wholesale electricity billed to retail providers, distributors and others.

The overcharges occurred because the council kept wholesale prices at the maximum level allowable — $9,000 per megawatt hour — during that 32-hour period. The council should have stopped intervening by then and instead let supply and demand determine pricing, Potomac said.

Even if the commission were to reverse the overcharges, huge bills incurred by retail power providers, distributors and others would remain.

According to Potomac, real-time market costs on the Texas grid totaled about $47 billion from Feb. 14-19 because of power outages during the crisis and the sky-high wholesale prices — compared with about $10 billion in real-time market costs for all of 2020.

During a brief discussion Friday of Potomac’s recommendation, D’Andrea said that resetting prices at this point would set off farreaching consequences that can’t be predicted but likely would trigger a new set of complications.