AUSTIN, Texas (CN) — The Texas Legislature’s whirlwind week of energy legislation picked up Wednesday morning when Speaker of the House Dade Phelan rebuked a bill, drafted in the Senate and backed by top Republican state officials, that would have retroactively reduced energy prices that spiked during February’s winter storm.
A House committee heard testimony on Tuesday from experts such as the state energy grid’s recently terminated CEO and a finance guru, who argued with lawmakers about whether the state’s Public Utility Commission can and should reverse billions of dollars in electricity costs imposed by the Electric Reliability Council of Texas, or ERCOT, which operates the state’s energy grid.
On Monday, state senators suspended parliamentary procedures and rules to rush an emergency law, Senate Bill 2142, to the Texas House of Representatives at the behest of Texas' Republican Governor Greg Abbott.
Lieutenant Governor Dan Patrick, the Republican official who presides over the Senate, repeatedly emphasized the necessity of legislation, which was prompted by an independent market monitor’s report that ERCOT had overcharged Texan utilities $16 billion in energy costs for 32 hours during February’s deadly winter storm. The Senate overwhelmingly favored the bill, passing it with a 27-3 vote.
But that bill was dead on arrival in Phelan’s chamber. The Republican House speaker had announced via Twitter on Tuesday afternoon that he opposed any efforts to wind back the price of power during the winter storm.
“ERCOT and the Public Utility Commission of Texas made management decisions to set and keep the real-time prices at the system cap of $9,000/MWh, which was a proactive decision and not an error based on the electric market,” Phelan wrote. “ERCOT and PUC failed Texas repeatedly during this tragic event, but the decisions made on pricing were made based on ensuring the reliability of the grid. I believe that these decisions may have saved lives.”
In his statement, Phelan referenced numerous bills in development in the House of Representatives that aim to reform ERCOT and change other energy market regulations.
During the Tuesday hearing, the Texas House Committee on State Affairs heard from Chris Edmonds, the global head of clearing and risk at Intercontinental Exchange, which operates global exchanges, clearing houses and other financial institutions.
Edmonds argued that the Senate’s proposed law would degrade confidence in the state, causing a “ripple effect” that could increase prices elsewhere in the economy as firms hedged their bets against a new threat of retroactive price changes and their downwind effects.
“The price in the future will be different,” Edmonds said Tuesday. “I am saying that in the future, if you alter the market structure … that will come at a higher price later for all Texans, for all Texan companies.”
Phelan’s stonewall resulted in a tense confrontation Wednesday morning between Phelan and Representative Trey Martinez Fischer, a Democrat representing northwestern portions of San Antonio. Fischer submitted a motion to bring the Senate’s bill before the entirety of the House, but was unilaterally shot down by Phelan.
Patrick, the state’s lieutenant governor, asked Attorney General Ken Paxton on Tuesday to consider whether the PUC may legally “correct the pricing of wholesale electricity and ancillary services.”
Paxton’s office sided with the Senate, finding that the state’s utilities law gives the PUC “complete authority to act to ensure that ERCOT has accurately accounted for electricity production and delivery among market participants in the region.” Paxton advised that a correction to the price of electricity would “likely” not raise a court’s eyebrows with regard to “constitutional concerns … provided that such regulatory action furthers a compelling public interest.”
Arthur D’Andrea, who had been the sole remaining member of the PUC after its other two co-commissioners resigned following the winter storm, sent Abbott a letter Tuesday afternoon resigning “effective immediately upon the appointment of my [his] successor.” In a statement, Abbott pledged to name a replacement “in the coming days.”
The disputed $16 billion in charges prompted multiple lawsuits. Paxton sued a now-bankrupt electricity provider for grossly overcharging Houston-area residents. The state’s top lawyer now says his office is working with the company to release its former customers from their collective $29.1 million owed in unpaid electricity bills.
CPS Energy, San Antonio’s utility, was applauded by the city’s mayor when it took ERCOT to court over its allegedly excessive prices during the winter storm.
Read the Top 8
Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.