Texas racked up a $50 billion energy bill last week. It's not clear who's going to pay it.
When the demand for energy spiked last week in unusually cold Texas and power plants went out of service, the state's Public Utilities Commission (PUC) pushed wholesale electricity prices to a peak of $ 9 per kilowatt-hour, an increase of 7,400 Percent year over year equates to the normal rate of 12 cents per kilowatt hour, reports The Texas Tribune. "The rate hike was supposed to entice power producers to bring more juice to the grid, but the staggering costs were passed directly on to some customers."
Texas became national news when its power grid, which is monitored by the Texas Electric Reliability Council (ERCOT), nearly collapsed and lost 4.5 million customers. But "now that the lights are back on in Texas, the state has to figure out who will pay for the energy crisis," reports Bloomberg News. "They'll probably be ordinary Texans."
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"The previous price: $ 50.6 billion, the cost of electricity that was sold from early Monday, when the blackouts began, to Friday morning," estimates Bloomberg. "That's comparable to $ 4.2 billion the previous week." In Texas, energy retailers can compete for customers, and those who choose floating rate plans can expect hefty bills - up to $ 17,000 in one case. But even fixed income utilities "who suffered huge losses when electricity costs skyrocketed last week will inevitably seek to recoup them through their customers, taxpayers or bonds," reports Bloomberg.
Greg Abbott (R), Texas Governor who appointed the PUC, said Sunday he would work with lawmakers to help meet the huge energy bills. But customer pain is the power industry's win, report ProPublica and The Texas Tribune. After a 2014 freeze, Houston's CenterPoint Energy bragged to investors that it "benefited significantly" from high energy prices during the resulting blackout, adding, "To the extent that we get another polar vortex or whatever , we will be absolutely opportunistic and take advantage of these conditions. "
According to the Texas system, not only do energy providers not have to produce enough energy to avoid blackouts. "They are only encouraged to ramp up generation when dwindling power supplies have pushed prices up," report ProPublica and the Tribune. This incentive structure is a recipe for near misses - and blackouts, said University of Houston energy expert Ed Hirs.
It's bad politics now too. "We cannot allow anyone to exploit a market when they are primarily responsible for the dire consequences," said MP Brooks Landgra (R).
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