Texas Senate Passes Bill to Reverse $16 Billion in Energy Charges

Texas Lt. Gov. Dan Patrick is ramping up attacks on the state's energy regulator.EXPAND
Texas Lt. Gov. Dan Patrick is ramping up attacks on the state's energy regulator.
Mike Brooks
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The Texas Senate on Monday passed a bill that would reverse $16 billion in energy charges sustained during February’s deadly winter storm.

Filed by Mineola state Sen. Bryan Hughes, the bill earned near-unanimous support and passed by a 27–3 vote. It would push the Texas Public Utility Commission (PUC), which regulates the state’s energy grid manager, to order the $16 billion in charges reversed by Saturday.

Lt. Gov. Dan Patrick, who heads the Senate, expressed full-throated support for the measure. In a statement on his website, he acknowledged the error would “require an adjustment,” but that it would be the “right thing to do.”
At a press conference after Monday’s vote, Patrick said the senators are calling for Gov. Greg Abbott to join them in demanding the cost reversals.

"I think if [Abbott] will say he'll sign this bill, it may help us get this bill through the House,” he said.

Patrick, who some speculate is considering a run to unseat the governor in 2022, had previously criticized the state’s retail energy consumers for signing up for a variable plan. But Patrick now backs the bill, even grilling the PUC’s chair on Thursday in a “highly unusual” appearance at a Senate committee hearing, according to The Dallas Morning News.

Also unusual was the way that Senate Bill 2142 worked its way through the Legislature. Lawmakers missed the Friday filing deadline, but the Senate bent its rules to allow the bill to be submitted and voted on within the same day, according to The Texas Tribune. Effectively going back in time, senators withdrew Thursday’s motion to adjourn so that Hughes could file it “before” the Friday deadline.

On Monday, Patrick also sent a letter to Texas Attorney General Ken Paxton asking for an expedited opinion on whether the PUC can legally issue orders to alter wholesale energy market pricing.

Following February’s deadly winter storm, an independent energy market monitor found that the state’s grid operator, the Electric Reliability Council of Texas (ERCOT), overbilled customers by $16 billion. But while some lawmakers insist on clawing back those costs, others worry about the bill’s constitutionality and fear it could weaken trust in the state’s energy market.

When the state’s power grid began experiencing shortages on Feb. 15, PUC demanded that ERCOT raise prices to the market cap of $9,000 per megawatt-hour. Yet an independent market monitor later found that ERCOT extended that pricing by an additional 32 hours — well after the shortage had ended.

Republican state Sens. Angela Paxton of McKinney and Muenster’s Drew Springer championed the bill on social media.

“The $16B error by @ERCOT_ISO & @PUCTX needs to be addressed IMMEDIATELY,” Springer said in a tweet. “PUC has the opportunity to adjust the 32 hours of unnecessary emergency pricing so Texans aren't stuck footing the bill for years to come. Long-term recovery cannot be bankrupt by inaction.”

Even though it was widely embraced, not everyone supported the bill. North Richland Hills state Sen. Kelly Hancock voted against it, writing in a statement that he feared it may violate the U.S. and Texas constitutions.

Instead, the Republican is promoting three bills that he filed last week which would similarly address energy issues.

"These bills are among a number of clearly constitutional options to remedy the market imbalance caused by extended emergency pricing without breaking contract obligations or engaging in the precarious politics of government repricing, which may ultimately disincentivize the investment Texas needs for real electric reliability,” Hancock said.

Also on Monday, Forbes reported that wholesale retail energy provider Griddy has filed for bankruptcy. The company had come under fire after customers complained of astronomical charges during the winter storm. One North Texas man racked up a bill of nearly $17,000 and another told the Observer he owed $3,000 for one week.

Not everyone is sure that the state can retroactively claw back the $16 billion in charges. Ed Hirs, an energy fellow at the University of Houston, told Spectrum News that it’s a tricky issue because the transactions have already occurred.

On top of that, Hirs said the debacle doesn’t look good for the state, which was mocked worldwide for its inability to manage the crisis, during which dozens of Texans died. Other states like Mississippi are now touting their own energy grid in business talks, effectively thumbing their nose at business-friendly Texas.

“This is a black eye for the state that I just don’t think anyone in Austin fully appreciates yet,” Hirs said.

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