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The Public Utility Commission of Texas has rejected a proposal to retroactively reverse the market pricing for electricity that resulted in ERCOT overcharging the Texas electricity market by US$16 billion during the Texas Freeze in February.
At a hearing on Friday, the PUC of Texas decided that it would not correct retroactively the overcharge with which the Electric Reliability Council of Texas, ERCOT, charged power companies in the state at $9,000 per megawatt hour (MWh) for a period of 32 hours during the worst of the winter storm in the state.
Power companies passed on that spike in prices to consumers, some of whom received astronomically high electricity bills.
Last week, Potomac Economics, as the Independent Market Monitor (IMM) for the Public Utility Commission of Texas, said that ERCOT exceeded the mandate of the Commission by continuing to set process at the value of lost load (VOLL) long after it ceased the firm load shed.
“The pricing intervention that raised prices to VOLL should have ended immediately at that time. 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,” the report of the independent market monitor for the PUC of Texas said.
“This decision resulted in $16 billion in additional costs to ERCOT's market,” said the report, recommending that the Commission direct ERCOT to correct the real-time prices from 0:00 February 18, 2021, to 09:00 February 19, 2021, “to remove the inappropriate pricing intervention that occurred during that time period.”
The Commission, however, declined to do so at its hearing on Friday.
“You don't know who you're hurting. You think you're protecting the consumer and turns out you're bankrupting a co-op or a city. And so it's dangerous, after something is run, to go around and redo it,” PUC Chairman Arthur D'Andrea said during the hearing, as carried by NPR.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com