Is ERCOT powerless or elected officials powerless?

By RICHARD LEE

The sole remaining member of the Public Utility Commission resigned Tuesday after he was caught on tape promising investors that the commission would work to dissuade the Legislature from reversing billions in electric rate overcharges assessed during the February winter storm.

In the March 9th audio published Tuesday by Texas Monthly, Arthur D’Andrea told investors on a conference call that his agency would work to prevent the price correction.

“I wish I could tell you there’s no way in heck that it’s going to be repriced, but I can’t,” he said. “If enough legislators want something done, they can pass a bill and get it done. But right now it’s just a contentious political issue and I’m advising on it and the best I can do, you know, is put the weight of the commission in favor of not repricing.”

He also cited the 30-day deadline on settling ERCOT contracts, telling those on the call the matter would be settled by Friday, March 19th or Saturday, March 20th. Though he didn't cite the call as the reason, Governor Greg Abbott asked for and received D'Andrea's resignation Tuesday evening.

The issue put the Senate on the opposite side of the House and governor. Lt. Governor Dan Patrick and 28 members of the Senate sent a letter last week to the PUC asking them to reverse billions of dollars in charges they say were erroneously assessed through market intervention on the part of regulators. The Senate says those overcharges landed disproportionally on municipal and retail electric providers, putting customers in danger of footing the bill while some large companies reaped windfall profits.

Operators at the Electric Reliability Council of Texas (ERCOT) pegged the price of a megawatt of electricity at its statutory maximum of $9,000 for 32 hours between February 17th and 19th.

A representative of the independent market monitor told members of the Senate Jurisprudence Committee last Thursday that was a mistake. Once the immediate “load shed” emergency had passed, she said, ERCOT should’ve backed off the cap and let supply and demand determine the price, as intended by market rules.

ERCOT CEO Bill Magness and D’Andrea also testified before the committee, saying the price needed to stay at the maximum to prevent instability in the grid as supply and demand would shift in response to lower prices.

At the same hearing, D’Andrea testified that it would be illegal for him to alter these transactions and that only the Legislature could act. Governor Greg Abbott backed him up in a letter sent Friday night. “The only entity that can authorize the solution you want is the legislature itself,” he wrote. The Senate did act, filing, hearing, and passing a bill in a single day, directing the PUC to undo the charges, sending the measure to the House Monday with hope for similarly rapid progress.

The House declined to take immediate action, and with the weekend deadline rapidly approaching, Lt. Governor Patrick held a Thursday press conference to ask the governor to take matters into his own hands.

Attorney General Ken Paxton released an opinion Wednesday that the PUC has the full power to order ERCOT to fix the pricing errors, contradicting D'Andrea's testimony before the Senate last week.

Patrick asked Governor Abbott to order D'Andrea, who will act as commissioner until a replacement is confirmed, to tell ERCOT to make the change. If not, he said the governor can order the PUC to order ERCOT to announce that these contracts are under investigation, preventing those contracts from closing out and allowing time for more legislative inquiry.

"The Texas Senate has made it clear, we're standing up for the ratepayers on this," said Patrick.

"We believe it needs to be corrected. Hopefully, the Governor will take the action - we believe he has the authority to do so. "