Texas PUC Outlines Review of Response to Power Disaster

The regulatory group that oversees Texas’ deregulated power market has identified eight areas the agency will focus on as it continues to study the state’s response to a mid-February storm that left millions of electricity customers without power for several days.

Texas power customers, along with electricity generators and retail power providers, continue to grapple with the financial impacts of the event. A third power company on March 15 filed for bankruptcy.

The Public Utility Commission (PUC) of Texas on March 12, as part of an open meeting, listed items including weatherization of generation equipment, and also a study on how to improve the state’s power market, as part of its ongoing research into the causes and effects of the extreme winter weather on Texas’ power transmission and distribution system.

“I am proud of the work PUC staff is doing to shed light on the issues that combined to interrupt power for millions of Texans—we must make sure it never happens again,” said Arthur D’Andrea, the PUC chair who was appointed to the post after former PUC head DeAnn Walker resigned March 1, one of several resignations or firings—including the head of the Electricity Reliability Council of Texas (ERCOT), the state’s grid operator—of officials in the wake of the February power outages.

“These areas of focus have emerged as the most likely contributors to the disaster and I’m confident our team will collaborate closely with Texans and the entities that serve them to get answers and devise solutions to protect our state,” D’Andrea said.

Texas power retailer Griddy Energy on Monday filed for bankruptcy after ERCOT cut off the company’s access to customers for unpaid bills in the wake of the February freeze. Griddy is the third power provider in the state to file bankruptcy; the state’s largest cooperative, Brazos Electric, sought bankruptcy protection with a March 1 filing. Just Energy Group, a Canadian retail energy seller that operates in Texas, last week filed for court protection in Canada and bankruptcy in the U.S.

Derek Potts, founder and national managing partner for Houston, Texas-based Potts Law Firm, in an email Monday to POWER, wrote, “Griddy’s lawyers filed for bankruptcy in federal court in Houston today, minutes before our scheduled court hearing on injunctive relief on behalf of the company’s former customers. This action by no means ends our fight to recover the tens of millions of dollars debited from Texans’ financial accounts during the storm, and to erase the negative reports made to credit agencies,”

Potts, who serves as counsel for Griddy’s customers, wrote, “We will continue to represent the class throughout the bankruptcy proceeding, protecting all Griddy customers and seeking to recover the funds that were taken from them.”  

Agency’s Areas of Focus

PUC Deputy Executive Director Connie Corona on Friday detailed the agency’s areas of focus in a memo made publicly available. They include:

Generation Weatherization and Emergency Operations. A review led by the PUC’s Infrastructure division will include an examination of weatherization and emergency operations standards for power generation facilities. It also will include a look at the content and processes for review and certification of emergency operations plans.

Essential Generation Load. The Infrastructure division also will lead an effort to establish standards and processes to protect the load “that provides an essential service to electric generation,” along with weighing “the necessity of additional generation resiliency measures.”

Essential Customer Load and Load Shed. The agency’s Market Analysis division in this project will examine the standards and processes “related to critical customer load and procedures related to emergency load shed.”

ERCOT Operations. The Market Analysis division also will lead a review of ERCOT’s forecasting and planning processes. The goal is to establish standards for ERCOT designation of emergency conditions.

Communications and Governance. The PUC executive director’s office will lead a review of communications standards and expectations among utilities, ERCOT, the commission, and the public. The review is expected to identify improvements for the commission’s communications with both the public and state lawmakers. It also is intended to identify potential improvements to ERCOT’s governance structure, bylaws, and stakeholder process.

Market Settlements. The Market Analysis division will look at ERCOT settlements and market uplift processes.

Wholesale Market Design. The Market Analysis division also will review and identify potential improvements to the rules and protocols of ERCOT’s wholesale electric market. The review’s emphasis will be on the pricing of energy, along with ancillary services.

Retail Market. The PUC’s Customer Protection division will lead a review of the commission’s customer protection rules. The emphasis will be on disclosures for certain electric product types, along with potential customer protections specific to emergency conditions.

The commission noted several projects that will be used to gather testimony and memoranda for the reviews. They include:

Project 51825: Investigation Regarding the February 2021 Winter Weather Event

Project 51830: Review of Wholesale—Indexed Products for Compliance with Customer Protection Rules for Retail Electric Service

Project 51839: Electric—Gas Coordination

Project 51840: Rulemaking to Establish Weatherization Standards

Project 51841: Review of 16 TAC § 25.53 Relating to Electric Service Emergency Operations Plans

Project 51871: Review of the ERCOT Scarcity Pricing Mechanism

Project 51888: Review of Critical Load Standards and Processes

Project 51889: Review of Communications for the Electric Market

Utility Suing ERCOT

The Wall Street Journal, citing people familiar with the matter, on Friday reported that ERCOT had talked with financial groups, including Goldman Sachs, about possible ways to address a more than $3 billion shortfall in electricity payments from Texas generators and power market participants in the wake of the storm.

The Journal said the grid operator acknowledged that some energy retailers have not paid for the electricity they bought during the February event. CPS Energy, meanwhile, the public power utility for San Antonio, on Friday filed a lawsuit against ERCOT. CPS wants to block ERCOT’s efforts to recoup those costs.

Potomac Economics, an independent market monitor, has said ERCOT overcharged power providers about $16 billion during the crisis. ERCOT has said it will not reduce those charges.

One Texas power provider, Brazos Electric Power Cooperative, on March 1 filed for Chapter 11 bankruptcy protection. The co-op said it could not pay a $2.1 billion charge from ERCOT.

Darrell Proctor is associate editor for POWER (@POWERmagazine).

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