AUSTIN, Texas — Texas' lieutenant governor is calling on the Texas Public Utilities Commission (PUC) and the Electric Reliability Council of Texas (ERCOT) to correct a $16 billion emergency pricing error amid the winter storms.
According to Lt. Gov. Dan Patrick's office, PUC ordered ERCOT on Feb. 15 to institute the $9,000 per megawatt-hour cost cap, which is designed to encourage increased power generation during an extreme shortage. However, according to the Independent Market Monitor (IMM), ERCOT incorrectly extended that pricing intervention 32 hours after the power shortage had ended, which resulted in the additional $16 billion in charges.
The IMM is Potomac Economics, an independent economics and engineering firm that has served as ERCOT’s market monitor for the past 16 years. It is their job to identify mistakes and recommend action. Patrick said the IMM contacted ERCOT on Thursday, Feb. 18, saying the pricing was incorrect, but ERCOT ignored their recommendation.
"Today, I am calling on both the PUC and ERCOT to follow the recommendations of the IMM and correct these mistakes. Correcting this $16 billion error will require an adjustment, but it is the right thing to do," Patrick said. "It will ultimately benefit consumers and is one important step we can take now to begin to fix what went wrong in the storm.”
The Texas Tribune reported Friday that PUC had an opportunity to eliminate some of ERCOT's $16 billion mistake, but the "board of the Public Utility Commission chose not to do so."
Another error was caught by the IMM, which Patrick is also calling for the immediate fix of. Patrick said ERCOT failed to cap ancillary service prices at $9,000, which resulted in prices rising as high as $24,000 a megawatt-hour at intervals during the storm.
"Pricing should never have exceeded the $9,000 cap at any time," Patrick said.
PUC Chair Arthur D’Andrea told The Texas Tribune that a retroactive decision on the pricing fix would positively affect some and negatively affect others.
“You don’t know who you’re hurting," D'Andrea said. "And you think you’re protecting the consumer and it turns out you’re bankrupting [someone else].”
ERCOT has 30 days from the event to correct the errors in pricing, according to the ERCOT Nodal Protocol Section 6.3 (6) (a), Patrick said.
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