No real change expected for the grid
Gov. Greg Abbott declared legislation to overhaul the Texas electrical grid’s operation an emergency priority, but lawmakers appear interested only in tweaking around the edges and spending taxpayer money, not forcing big corporations to accept a true transformation.
If anyone needs evidence that the governor’s office, and by extension the Public Utility Commission, was putting big business over consumers, listen to the
recording Texas Monthly obtained of PUC Chairman Arthur D’andrea.
He told investment analysts that he and the governor planned to protect Wall Street’s billions of dollars of windfall profits captured during last month’s freeze. Under D’andrea’s supervision, the state electricity grid operator artificially raised prices to $9,000 a megawatt-hour, including a 32-hour period in which they should have been allowed to fall, according to the state’s independent market monitor.
Lt. Gov. Dan Patrick and consumer advocates want D’andrea to roll back the price he and the grid operator ERCOT guaranteed generators. The market monitor has recommended the PUC reprice those 32 hours and save consumers $5 billion of the $16 billion in overcharges.
Recording leaked
“It’s a contentious political issue. The best I can do is put the weight of the commission in favor of not repricing,” D’andrea told a conference call on March 9 that Bank of America Securities hosted and closed to the public and the media. Someone gave Texas Monthly’s Loren Steffy, my predecessor, a recording of the call.
Abbott has publicly backed D’andrea’s decision. But embarrassed by the leaked recording, Abbott has since demanded D’andrea’s resignation. Since the only other two commissioners have already resigned, D’andrea will remain chairman until Abbott chooses a successor.
D’andrea also candidly revealed the governor’s plan to only make cosmetic changes to an electricity market that left 4 million homes without power for as much as 82 hours during the coldest nights in decades and killed more than 50 people.
Abbott was not going to appoint any new commissioners while the Legislature is in session because he did not want to deal with Senate confirmation. D’andrea bragged that “I went from being on a very hot seat to having one of the safest jobs in Texas.”
D’andrea then told the analysts, whose job is to advise investors on which stocks to purchase, to not expect any significant changes in the ERCOT market, despite its dismal failure. He said the state would ask companies to do a better job preparing for inclement weather but added lawmakers and the governor do not have the stomach to overhaul the extremely complicated competitive market.
Taxpayers to pay
The Legislature is also unlikely to bail out private companies that will go bankrupt because prices went so high for so long, he told the analysts. But D’andrea said Texas lawmakers had promised him they would authorize a bond to cover the costs to nonprofit municipal and cooperative utilities.
The generators, traders and banks that captured obscene profits will get to keep their windfall, while Texas taxpayers will pay the bill off over the next 20 or 30 years. That is in addition to consumers paying higher rates for electricity because the commercial retail electricity providers that survive are required to pay the bills of the bankrupt.
Based on how Patrick humiliated D’andrea during a Senate hearing March 11, it is safe to say the lieutenant governor is irate. He pushed through a bill ordering the PUC to reprice those 32 hours, and Attorney General Ken Paxton confirmed in a legal opinion that the PUC could do it constitutionally.
That opinion and D’andrea’s departure are unlikely to change Abbott’s game plan. House Speaker Dade Phelan has sided with Abbott and nixed any attempt to reprice, over bipartisan objections.
Instead, Phelan and Abbott expect Texas taxpayers to cover the costs of weatherizing power plants to make sure this doesn’t happen again. They want to tap the state’s Rainy Day Fund because they think it is somehow appropriate to spend taxpayers’ savings on things corporations should do independently.
Remember, these are the same people who opposed spending Rainy Day money on schools or health care.
Failure cause hidden
As for getting to the bottom of how the grid collapsed, we will probably never know. Dozens of journalists, including myself, have asked the Electric Reliability Council of Texas to turn over documents that could reveal what happened. But the electric companies have asked Paxton to declare all of the materials confidential, citing an exemption from disclosing proprietary information.
D’andrea, meanwhile, has appointed an insider as director of accountability at ERCOT. Adrianne Brandt is a former adviser to the PUC chair and has spent her career at Texas utilities, creating doubts about what new insights she will bring.
Less than a month after the Texas Blackout, our leaders are already sidestepping and covering up. Once again, corporations get bailed out and consumers remain poorly served.