A Texas appeals court stunned the electricity world on Friday by ruling that the Utility Authority overstepped its authority during the deadly February 2021 winter storm when it raised the price of electricity to a maximum of $9,000 per megawatt-hour.
The price was set that high on February 15th and 16th, and has been held there for several days by the commission responsible for regulating electricity in Texas trying to tell the market that more power generation is urgently needed. The ruling explains that its leadership believed that the financial tool aimed at adjusting the cost of electricity was broken as electricity generators stopped working and grid operators cut off electricity to homes and businesses.
The price of electricity is fluid in Texas. It rises when demand is high in order to stimulate more production and keep the network from overloading. But the state’s electricity market watcher said in the aftermath of the storm that Texas Overcharging retail electricity providers by $16 billion For energy used as the storm continues – prices that have left service providers with huge debts some cases Clients landed giant bills.
The exorbitant price of electricity during the storm sent retail power providers and electric co-ops into financial straits across Texas. Many were forced to buy energy on the wholesale market at high prices and apply for it bankruptcy in the aftermath of the storm.
During the 2021 legislative session, Texas senators pushed for a 32-hour financial compensation during stormy week when regulators kept wholesale electricity rates at the $9,000 cap after another generation came online, but were unable to reach an agreement with their counterparts at home. . The power grid legislation that was eventually passed did not address this problem. Instead, legislators laws passed It would allow companies to obtain cheap, long-term loans to avoid passing large costs on to consumers all at once.
Electric utility Luminant appealed pricing decisions for the PUC in the month after the storm. He argued that the commission had exceeded its power to set the price at the cap, among other points. The Austin-based 3rd Court of Appeals agreed with its ruling on Friday. But the consequences of her decision are unlikely to be felt immediately in the Texas electricity market since the court returned the case for further consideration, and the decision may still be appealable to the Texas Supreme Court.
Vista Corp. Luminant’s parent company, Lost at least $1.6 billion through the storm because it paid sky-high prices for natural gas to power its plants and had to buy electricity from the wholesale market to meet delivery obligations to customers.
“We agree with today’s decision by the Austin Court of Appeals, but this is an ongoing legal process, and we cannot predict the final outcome,” Vestra said in a statement.
The Public Utilities Authority refused to comment on the decision. first reported By The Dallas Morning News.
If it continues, Allison said, it could theoretically create “a massive mess” for the PUC, the state grid operator, and the Texas Electrical Reliability Board to cancel transactions that occurred during the days when the price was set at the $9,000 ceiling. Silverstein, who previously served as a senior advisor to both the PUC and the Federal Energy Regulatory Commission.
“You’re going to have to figure out who paid what to whom and what kind of undo the series of deals and series sales during repricing,” said Silverstein, who now works as an energy consultant in Austin.
She said that would be a lengthy process with little chance of benefiting end users. “I don’t think the end consumer will see a single penny of benefit from this.”
But Silverstein and other electric experts who spoke with the Tribune in the background questioned whether the legal remedy would go as far as untangling transactions that took place during the storm — and more likely to affect other lawsuits between energy companies still fighting in courtrooms in the aftermath of the winter storm, or Provide specific treatment for Luminant.
“In practice, the prospects of obtaining a meaningful solution away from legal principles would be very difficult,” Silverstein said. There may be many lawsuits, she said, but “the money is long gone.”
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