Mar 17, 2023
Texas Court Overturns Power Price Rulings From 2021 Freeze
(Bloomberg) -- A Texas appeals court has reignited a fight over soaring power prices during the deadly 2021 winter storm that crippled the state’s electric grid.
A court in Austin on Friday sided with power generator Vistra Corp., deciding the Public Utility Commission of Texas exceeded its authority by pinning prices to $9,000-per-megawatt-hour during the storm in an effort to attract more power supplies onto the grid. The action resulted in billions of dollars in overcharges to consumers, according to the state’s power market monitor.
The winter freeze triggered widespread blackouts, killed more than 200 people and left Texas in chaos for nearly a week. Some of the state’s biggest power generators, including Vistra, were forced to buy electricity at elevated prices to meet contractual obligations after their plants froze or they couldn’t get natural gas to run the facilities during the storm. The ruling could open the door for them to claw back some of that money.
The economic consequences of the storm have been far-reaching with billions of dollars of state-backed financing issued to cover the costs of the storm. Repricing the market and undoing commodity contracts would be a massive undertaking, said Joshua Rhodes, a research scientist at the University of Texas at Austin who specializes in energy systems.
The immediate fallout of the decision remains unclear given the court remanded the case for further proceedings. The PUCT has the ability to appeal to the Texas Supreme Court. It declined to comment on the ruling.
“It’s unclear how repricing would even work,” said David Naylor, of Rayburn Country Electric, an electric cooperative in the state. Rayburn had to issue $908 million in bonds that will take their northern Texas customers 28 years to pay back.
“I’m sure it will be appealed but this is a solid disapproval of the PUCT’s actions,” Naylor said.
--With assistance from Madlin Mekelburg.
(Updates with reasons for purchases in third paragraph)
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