Texas Regulator Appeals Decision Reversing ‘21 Blackout Costs

A truck drives down the street during a power outage in McKinney, Texas, U.S., on Tuesday, Feb. 16, 2021. The energy crisis crippling the U.S. showed few signs of abating Tuesday as blackouts left almost 5 million customers without electricity, while refineries and oil wells were shut during unprecedented freezing weather. , Bloomberg

Madlin Mekelburg and Naureen S. Malik, Bloomberg News

Mar 24, 2023

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(Bloomberg) -- The Public Utility Commission of Texas urged the Texas Supreme Court to overturn a court ruling that found the agency overstepped its authority by allowing power prices to soar during the state’s deadly 2021 winter storm.

The PUCT defended its actions during the storm in an appeal filed Thursday, writing that regulators made “split-second decisions” during a “life-or-death situation” that may not be popular, but were necessary to address a market failure.

Attorneys for the regulator said the recent ruling against them has “thrown Texas’s electricity and associated markets into confusion.”

Last week a state appeals court stunned the Texas power market by siding with power generator Vistra Corp. which claimed in a lawsuit that PUCT had exceeded its authority by pinning prices to $9,000-per-megawatt-hour for days during the February 2021 storm, resulting in billions of dollars in overcharges to consumers. The decision reversed a pair of orders by the commission.

Read more: Texas Court Ruling Casts Uncertainty Over ‘21 Blackout Costs

Attorneys for the PUCT contend that the appeals court ruling should be overturned because the orders at issue expired years ago, so they cannot be invalidated. Plus, they said that Vistra and other companies are already seeking to unwind the pricing decisions in separate administrative proceedings.

The lawyers argued that the court took issue with the agency’s decisions, but failed to identify what a correct course of action under the circumstances would have been.

“The stakes are high,” attorneys for the PUCT said in the filing. “Billions of dollars are potentially implicated. So is the commission’s ability to react quickly in emergency situations to save lives by minimizing blackouts and preventing a system-wide collapse.”

Energy costs on the state grid totaled $56 billion during the storm and a large chunk of that could be reallocated if the appeals court decision is upheld. Electricity prices would have averaged $2,404 a megawatt-hour, or been 73% lower if the PUCT hadn’t administratively set the price, according to a report commissioned by Vistra.

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