Abbott, Patrick clash over failed grid
The blame game over the state’s faulty electrical grid is creating a rare public rift between the two top Republicans in state government that could have a major financial impact on some utility companies and their customers.
First Lt. Gov. Dan Patrick on Friday blasted Gov. Greg Abbott’s newest appointee to oversee the state’s utility system for a lack of “competence and questionable integrity.”
Then Monday, Patrick pushed legislation to force Abbott appointee Arthur D’andrea and the state Public Utility Commission he leads to reverse billions of dollars of power overcharges, something both D’andrea and Abbott have said is beyond the PUC’S authority.
“The Senate has acted,” Patrick said after the bill passed that chamber during an expedited three-hour process. “We are asking the governor to join us, and I think if he says he’ll sign this bill, the House will join us.”
Abbott signaled Monday he won’t back down either, and though he called for the Legislature to address the issue, he says retroactively changing the prices would violate the Texas Constitution.
For most of the past two years, Abbott and Patrick avoided confrontation, instead trying to project unity on most issues, including the pandemic, and legislative priorities such as property tax reforms and changes in public school funding.
But that unity has eroded since the deadly winter storms that blasted Texas last month, leaving millions without power and broken water pipes despite a decade of warnings that the state’s power grid was vulnerable amid increasingly common winter storms.
At the core of their public dispute is how to deal with outrageous wholesale electricity bills that some utilities are facing.
Winners and losers
Sky-high emergency prices left in place too long by the Electric Reliability Council of Texas resulted in $16 billion in overcharges for utility companies, according to the agency’s independent market monitor, consulting firm Potomac Economics.
Patrick says the error can be reversed retroactively by D’andrea, who as chair of the utility commission has authority over ERCOT.
The market monitor has estimated that no more than $5.1 billion of that total can be reversed because of contracts and other financial arrangements that can’t be changed now.
But ERCOT leaders and Abbott say there is a difference of opinion of whether there was an error. ERCOT’S leader Bill Magness said the prices were kept intentionally high to assure public safety by incentivizing generators to bring more power to the grid to help Texans weather the freeze.
On Monday in Houston, Abbott said the Legislature has to hold hearings and investigate all the constitutional complexities that would be involved in repricing.
Typically, wholesale electricity prices are around $50 per megawatt-hour. But during the storms, the price climbed to $9,000 per megawatt-hour.
While that price was an incentive for more companies to provide electricity for the grid, it also resulted in astronomical prices for utility companies that didn’t have their own reserves. CPS Energy is suing ERCOT for running “up $20 billion in charges for 5 days of energy supply due to its lack of oversight, preparedness, and failure to follow its own protocols.”
Brazos Electric Power Coop, the state’s largest power company, was pushed into bankruptcy because of the costs of buying power that week. That company told the media it made the decision not to pass on those costs to its customers.
Still, not all utility companies were hit hard. Those with sufficient reserve power — including many in the Texas Panhandle, Central Texas and the Rio Grande Valley — were able to produce electricity without having to pay the marked-up prices.
D’andrea has said that allowing repricing would merely shift the “winners and losers,” rather than provide real relief, insisting that retail electric providers would not pass down savings to customers. Patrick did not like that answer.
Abbott sticks with D’andrea
During a Senate committee hearing Thursday, Patrick did something he’s only done one other time during his two terms as lieutenant governor: He personally attended the committee hearing and grilled D’andrea himself. It ended with Patrick calling for D’andrea’s resignation.
“In light of the PUC chair’s refusal to take any corrective action, despite the fact that he has the authority and the evidence is clear, I am asking Gov. Abbott to intercede on this issue,” Patrick said in a press statement he sent out late Friday. “I am also asking Gov. Abbott to replace Mr. D’andrea on the PUC when he fills the other two vacancies there. Mr. D’andrea’s position requires both professional competence and honesty and he demonstrated little of either in the hearings yesterday.”
Patrick said D’andrea does have the authority to fix pricing during “unusual circumstances.”
D’andrea has a long history with Abbott. From 2009 to 2015, he served as assistant solicitor general when Abbott was the Texas attorney general. Then after Abbott became governor, D’andrea became assistant general counsel for Abbott, who first appointed D’andrea to the utility commission in 2017.
Abbott named D’andrea to lead the commission March 3, after Patrick and other legislators essentially forced Abbott’s other appointees on the three-member board to resign.
Senate Bill 2142, which within a few hours went from introduction to passage out of the chamber on a 27-3 vote, would force the utility commission to order repricing of the high-cost wholesale electricity by March 20. It does not offer detail about how the price corrections should be executed.
Texas House Speaker Dade Phelan said in a statement Monday there had been “conflicting testimony throughout this process about the costs associated with repricing, and there must be additional review on this consequential issue.”
The House State Affairs committee will meet at 9 a.m. today for another hearing on the matter.