Texas utility regulators on Friday declined to reverse the regional grid operator's "inappropriate" pricing that cost the market $16 billion over the course of 32 hours, based on calculations made by Potomac Economics, the region's independent market monitor (IMM).
Public Utility Commission (PUC) Chair Arthur D'Andrea and Commissioner Shelly Botkin voted against directing the Electric Reliability Council of Texas to retroactively reprice its real-time prices that were artificially inflated during the generation shortages and subsequent forced outages, in order to reflect scarcity pricing. The decision goes against the recommendations of ERCOT's independent market monitor, which first reported the inflated prices to the PUC Thursday.
"These are difficult decisions," said D'Andrea during the PUC's open meeting, adding he felt it was "dangerous" to redo pricing retroactively. "You don't know who you're hurting," he said. "You think you're protecting the consumer and it turns out you're bankrupting a co-op or a city."
Texas regulators have faced a wave of backlash in the weeks since widespread outages left millions without power for days, including over the price of power which hit its market cap in order to reflect scarcity of generation resources during the cold snap. But according to Potomac Economics, those high prices lasted 32 hours longer than appropriate — the grid operator should have immediately lowered prices after load shed instructions ended the evening of Feb. 17. But prices remained high through the morning of Feb. 19, ultimately costing the market billions of dollars over the course of that period.
The IMM recommended the PUC direct ERCOT to correct that pricing, to avoid "the inappropriate pricing intervention that occured" in order to prevent "substantial adverse economic effects."
"We recognize that revising the prices retroactively is not ideal," Carrie Bivens, director of the IMM, wrote in the Thursday letter to the PUC. "In this case however, given that the prices are inconsistent with ERCOT's protocols and the Commission Order and that allowing them to remain will result in substantial and unjustified economic harm, we respectfully recommend that the Commission take the action described above to correct ERCOT's real time prices."
However, the two PUC commissioners declined to act on Friday, concerned that there was too much uncertainty associated with who the decision might ultimately impact.
"It's just nearly impossible to unscramble this sort of egg," he said "and the results of going down this path are unknowable." Instead, he said, the commission should "focus on helping the people that were hurt" rather than "focusing … on throwing everything up in the air again creating another huge mess."
D'Andrea took over as chair of the commission this week, following the resignation of former Chair DeAnn Walker on Tuesday. ERCOT CEO Bill Magness was fired by the grid operator's board on Thursday, and declined to take or seek severance pay. Meanwhile, legislative hearings are ongoing into what action state lawmakers may take moving forward, and the House Oversight Committee on Thursday opened its own investigation.
Correction: An earlier version of this story misnamed ERCOT's market monitor, Potomac Economics.