AUSTIN (Nexstar) — Texas House Speaker Dade Phelan said the decision to set and keep electricity prices at $9,000 per megawatt-hour was “a proactive decision and not an error” based on the electric market.
Phelan said Tuesday the “decisions made on pricing were made based on ensuring the reliability of the grid,” adding that he believes “these decisions may have saved lives.”
Phelan’s statement flies in the face of the Senate fast-tracked legislation bill, which would require the Public Utility Commission to order a price change for more than 30 hours after the storm by the Electric Reliability Council of Texas at the recommendation of an independent market monitor hired by the state.
“Repricing based on disagreement with PUC and ERCOT’s management decisions is an extraordinary government intervention into the free market, which may have major consequences for both residential and commercial consumers going forward,” Phelan stated.
A House State Affairs committee hearing Tuesday morning focused on repricing and market effects.
Phelan said the testimony “demonstrated the complexity” of the financial fallout.
In the hearing, ERCOT’s president and chief executive officer defended his decision to keep the price where it was set.
“There is very limited justifications for price correction, and I think the thought behind that has always been market certainty basically,” ERCOT’s Bill Magness said. “You’ve got prices set, and if you change them you change various people’s accounts, and you don’t know what all downstream impacts are.”
But the independent market monitor stood by the recommendation to overturn billions of dollars in charges from Feb. 18 and 19.
“We still fall on the side of it being the right thing to do,” Carrie Bivens, who leads the market monitoring of ERCOT, told lawmakers.
State Rep. Eddie Lucio III, D-Brownsville, said Magic Valley Electric Co-Op, which is in his Rio Grande Valley district, could take a financial hit if the state forces the price correction.
“I’m just wanting to make sure that if we adjust over here, they’re not losing money,” Lucio said. “I don’t mind if they don’t make money… I just don’t want them to have to come out of pocket.”
Retail electric providers are facing financial holes, because they had to pay for electricity at the rate capped by ERCOT for the better part of a week. Power generators, who managed to operate during the winter weather, sold electricity at the capped rates and benefitted.
Some utilities have filed for bankruptcy in the aftermath of the storm. Others have notified regulators they would have to file for bankruptcy if the charges were overturned, because some costs would then fall to them.
Ultimately, ratepayers are likely to bear the brunt of any financial fallout, ERCOT’s CEO said.
“I will not deny that ultimately consumers will pay for everything, one way or the other,” he explained. “It’s just you’re making a choice about what bucket it’s coming out of, I guess.”
While presiding over the Texas Senate, Patrick lashed out in the chamber after receiving Phelan’s statement.
“The Texas Senate stood for individuals, and I’m proud of you,” he told the senators. “The House stood for big business.”
Phelan’s spokesperson responded to Patrick’s remarks late Tuesday.
“Speaker Phelan and Lt. Gov. Patrick have had no conversation about SB 2142,” Enrique Marquez, director of communications for the office of the speaker, said. “Speaker Phelan released a statement that highlighted his perspective on the caution necessary when discussing government intervention in the repricing of the electric market. Under House Rules, Speaker Phelan will refer all proposed legislation, including SB2142, to an appropriate committee with jurisdiction.”
Patrick replied the “clock is ticking” on helping Texas ratepayers.
“It is the Senate’s hope that the House will be allowed to vote on the floor, up or down, so their constituents know where they stand, just like we did,” Patrick added.
Patrick also took aim at Gov. Greg Abbott, who made correction of billing errors relating to the winter storm an emergency legislative item.
“Well, Mr. Governor, the Texas Senate has spoken,” Patrick said. “You still have not weighed in.”
A request to Abbott’s office for comment was not immediately returned Tuesday evening.