AUSTIN, Texas -- The Texas Senate took less than three hours on Monday to file and completely pass a bill that would allow the state’s top utility regulator to claw back $16 billion in charges for wholesale electricity incurred by market participants during the state’s power outage last month.
“The Senate has acted,” said Lt. Gov. Dan Patrick, who leads the chamber and has made the issue a top priority this session. “We are asking the governor to join us and I think if he will say he’ll sign this bill, it may help us get this bill through the House.”
Gov. Greg Abbott has made the issue an emergency item this session.
Having moved past the Legislature’s bill filing deadline on Friday, the Senate employed a parliamentary procedure during an unscheduled floor session on Monday to rescind its vote to adjourn last Thursday. That meant the chamber was operating as if it was Thursday, one day before the bill filing deadline, which allowed Sen. Bryan Hughes, R-Mineola, to present the bill and have it referred to the Senate Jurisprudence Committee.
The committee, led by Sen. Joan Huffman, R-Houston, quickly approved the bill without any discussion or testimony by a vote of 3-1. Sen. Brandon Creighton, R-Conroe, was the no vote.
About an hour later, the Senate reconvened and Hughes laid out his bill, which says there is a “compelling public interest” for the state’s Public Utility Commission to reverse $16 billion in wholesale electricity charges incurred during the final days of last month’s winter storms.
Those charges come from a decision by the commission and the Electric Reliability Council of Texas to implement a $9,000-per-megawatt-hour cap on Feb. 15, during the first day of the power outages to incentivize generators to create more power. But by Feb. 18, the worst of the power crisis had passed and the cap was no longer necessary, the state’s independent market monitor said earlier this month.
Still, PUC and ERCOT officials left the cap in place for an additional 32 hours on Feb. 18 and 19, which the independent market monitor said amounted to $16 billion in charges that would have been much lower if the cap had been removed.
PUC officials, however, have warned that reversing the charges could erode trust in the Texas power market, lead to unforeseen economic consequences and result in lawsuits.
The commission’s chairman, Arthur D’Andrea, told the Senate last week he did not believe he had the power to direct ERCOT to reverse the charges. The majority of senators believe he does.
Hughes’s Senate Bill 2142, clarifies that the commission has the authority to reverse the charges, which senators have called a “pricing error” by ERCOT officials, based on the assessment by the state’s independent market monitor.
The bill orders the commission to mandate the reversal of the charges by this Saturday. Experts have said the state must act quickly before further financial transactions are closed and cannot be reversed.
The Senate passed the bill by a vote of 27-3, with one senator absent.
It’s unclear whether the House will act with the same urgency. In hearings last week, House leaders said they would move methodically to tackle the failures exposed in last month’s power outages and expressed concern that reversing the charges would create financial duress in other sectors of the market.
Retail electric providers and distributors who suffered from having to pay high electricity prices during the storm would benefit from the reversal of charges. But power generators which weather-proofed their equipment to be able to run in extreme weather conditions, and also racked up high costs from the price of producing electricity when Texans most needed it, would stand to lose a lot of money.
