Texas Power Crisis Aftermath

Last week’s winter storms left the majority of Texans with massive power outages, as well as water and food shortages. 

The crisis resulted from two winter storms that swept across the US from February 10 – 17.  More than 4.3 million homes and businesses were left without power, some for several days.  The cause was initially blamed on frozen wind turbines, but frozen natural gas lines and instruments were the primary cause. 

On February 19, a lawsuit was filed in Nueces County and raised allegations against the Electric Reliability Council of Texas (ERCOT), claiming there were repeated warnings of weakness in the state’s electric power infrastructure that were ignored.  More lawsuits against ERCOT have been filed since then.

Governor Abbot issued a disaster declaration on February 12, which mobilized the Texas Military Department to assist in snow clearance and aid stranded motorists.  Abbott eventually requested a Federal Emergency Declaration, which was approved on February 14. President Biden authorized the Department of Homeland Security and the Federal Emergency Management Agency to provide emergency assistance throughout Texas.   

Abbott ordered natural gas producers not to export gas out of state and to sell within Texas instead to alleviate the energy shortage. 

Presently, about 325,000 Texans still lack power.  

As the power comes back to residents, there are additional worries regarding the sky-rocketing prices of energy passed along to consumers. 

The state has a uniquely unregulated energy market, allowing customers to pick their electricity providers among roughly 220 retailers in an entirely market-driven system.  Under some of the plans, when demand increases, prices rise.  

One resident, Scott Willoughby of Dallas, who did not lose power during the storms, received a bill for $16,000, nearly 70 times his typical bill.  

Willoughby is among several Texans who have reported astronomical electric bills.  

Public outcry elicited calls for action from lawmakers and prompted Governor Abbott to hold an emergency meeting with legislators this past weekend to discuss the enormous bills. 

When the cost of electricity spiked during the storms, some retail companies could not afford the wholesale prices, and therefore cannot provide power to their customers. Because of this, thousands of Texans will be involuntarily switched to a new electric company.

In this case, the state switches customers over to a company known as a Provider of Last Resort, or POLR.  POLR rates are generally higher than standard electric rates, adding to the already skyrocketing price for power in Texas. 

To avoid making customers pay for grid operations failure, the Public Utility Commission (PUC) has passed an emergency resolution to help ease the transition. 

Another wrench is with billing.  Most retailers use Smart Meters, which assumes there has been some kind of glitch, and bills the customer for a historical average when given zero reading. 

PUC asks retailers not to use Smart Meters as they would likely be charging customers for energy they did not use. 

PUC has also announced it will stop utility providers from cutting off customers, even if they do not pay their bill, and has requested that providers delay invoicing for residential and small commercial customers, including invoices with estimated meter reads. 

In a statement released this weekend, Governor Abbot said, “We are moving quickly to alleviate this problem and will continue to work collaboratively throughout this week on solutions to help Texas families and ensure they do not get stuck with skyrocketing energy bills.”