Days after the Texas Uri winter storm, the state’s electricity market was hit by severe economic consequences. The Electric Reliability Council of Texas (ERCOT) failed to pay $2.12 in required payments. About 17% of the amount owed for last week.
Ercot collects money to pay operators of power plants. The Austin-based Corporation said that $800 million of its revenue account will be used to pay a little amount of what they are owed. However, Ercot would still need $1.32 billion to pay back. A spokeswoman for the company said that there might be future payments owed by retailers.
Amid the historic frigid conditions in Texas, many state citizens couldn’t afford to pay the bills. Consequently, the shortfall in payments triggered a big problem over how to fill the payment gaps. Last week, some Texans received a staggering $17,000 three months electricity bill. In return, many Texans filed lawsuit against the Texas Energy Committee.
For instance, electricity costs reached a sky-high price in Denton, a North Texas city. The city filed a lawsuit against the Electric Reliability Council of Texas following the exorbitant price bills. It argued in the lawsuit filing that the payments were “an illegal and unconstitutional raid by [Ercot] on the credit of cities that operate electric utilities.”
The city explained in a statement that it would “explore all legal options to protect the financial assets of the City of Denton and its ratepayers from improper use,” adding that Denton had already received a restraining order against the grid operator.
Texas Goes from $22 to $9000 Per Megawatt-Hour
Last year, retail electricity providers, businesses and consumers, and local utilities only paid an average of $22 per megawatt-hour. However, following Texas’ stormy weather, the state Public Utility Commission adjusted the market prices to reach a maximum of $9000 per megawatt-hour until the emergency is ended. The increase jumped from $1,200 a megawatt-hour that the Public Utility Commission ordered last Monday.
Accordingly, the electricity costs skyrocketed for retail electricity providers and other consumers in Texas. The price increase resulted in massive losses to businesses and consumers alike. Namely, Vistra Corp that sells power to over 2 million homes in Texas said Friday that it had lost $1.3 billion. The company’s shares fell 24% on the same day.
Nevertheless, Vistra added in the statement that it had enough cash reserve to cover the losses, and worried that small electric retailers wouldn’t be able to recover.
“Billions of dollars changed hands in a week. People are going to go out of business over it,” Vistra Chief Executive Curt Morgan said.