US$16b power price error in Texas during freeze
Overhead power lines are seen during record-breaking temperatures in Houston, Texas, US.
Power grid operator Electric Reliability Council of Texas made a US$16 billion pricing error in the week of the winter storm that led to power outages across the US state of Texas, said Potomac Economics, which monitors the state’s power market.
ERCOT kept market prices for power too high for more than a day after widespread outages ended late on February 17, Potomac Economics, the independent market monitor for the Public Utility Commission of Texas, which oversees ERCOT, said in a filing.
“In order to comply with the Commission Order, the pricing intervention that raised prices to VOLL (value of lost load) should have ended immediately at that time,” the monitor said.
“However, ERCOT continued to hold prices at VOLL by inflating the Real-Time On-Line Reliability Deployment Price Adder for an additional 32 hours through the morning of February 19,” it said.
The decision resulted in US$16 billion in additional costs to ERCOT’s markets, Potomac Economics added.
The Public Utility Commission, the Texas power regulator, on Friday unanimously vetoed a request to cut about US$16 billion from state power charges during the final day of the February cold snap.
It said even a partial repricing could have unintended effects.
Separately, rating agency Moody’s Investors Service downgraded ERCOT by one notch to A1 from Aa3. Moody’s also revised the grid operator’s credit outlook down to “negative.”
Last Wednesday, ERCOT’s board ousted chief executive Bill Magness, as the fallout continued from a blackout that left residents without heat, power or water for days.
The mid-February storm temporarily knocked out up to half the state’s generating plants, triggering outages that killed dozens and pushed power prices to 10 times the normal rate.
Many of ERCOT’s directors have resigned in the past week and the head of the Public Utility Commission also resigned.
