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Electricity bill of $ 17,000? Deregulated power grid leads to sky-high prices for Texans





The downside of an independent energy market has left millions of Texans without power for days and now frightens some residents with five-figure energy bills, as Texas lawmakers seek to investigate the failures the only electricity network managed by the State.


Texas residents use social media with screenshots massive electricity bills they rack up following an unusual multi-day cold spell, with some Texans would have dealing with bills as high as $ 17,000 even before the billing period ends.

These sky-high bills come after the Texas Utilities Commission, which regulates the tariffs for Texas utilities, held an emergency meeting with the state’s electricity grid operator, the Electric Reliability Council of Texas. (ERCOT), Monday for increase energy prices to reflect the supply constraints induced by increased demand during the winter storm.

The resulting resolution helped push energy prices up to the limit of $ 9,000 per megawatt hour for about five days 180 times the average hourly rate before the storm, Reuters reported.

In anticipation of the price spike, Griddy, an electric utility that provides the variable rate plans affected by the increase, urged Last Saturday, its nearly 30,000 customers will switch energy suppliers if they cannot afford higher energy prices.

Prices have since fallen by around 90%, according to ERCOT data, but Texas Governor Greg Abbott (R), who called for an investigation in ERCOT for its management of the meteorological crisis, would have said the state would take measures to provide relief to residents affected by the sharp rise in prices.

ERCOT did not immediately respond to a Forbes request for comment on Saturday, in part on the number of customers affected by the rate hike, but most Texans have fixed-rate electricity plans that have not been affected by the price hike, the Dallas Morning News reported.

Key context

Texas is the only state in the country to operate its own electricity grid, and because key operations are confined to state borders, ERCOT operates efficiently without direct federal oversight (thanks to the Federal Energy Act signed by President Franklin D. Roosevelt in 1935). This leaves it to the Texas Utilities Commission to regulate prices in conjunction with ERCOT. While the arrangement saved energy costs, it also means that ERCOT, which manages around 90% of the state’s electrical load, cannot access the necessary capacity of the two other grids in the country in an emergency. Before the storm, ERCOT underestimated how much power it would need to cope with the cold conditions, forcing the grid to “rely on costly, fast-response replacement generation,” Griddy says, ultimately leaving millions of people without power for days.

Crucial quote

“When briefed, the commissioners agreed that system-wide energy prices, which were as low as around $ 1,200 on the first day of the weather crisis, were inconsistent with the fundamental design of the ERCOT market, ”said the Public Utility Commission of Texas. mentionned Monday. “Because energy prices must reflect the scarcity of supply, the market price of the energy needed to serve the load to be shed in the face of scarcity is also expected to be at its highest.”


“Friends of Texas – WITHDRAW YOUR AUTO-PAY ELECTRIC BILLS,” a Twitter user wrote Friday, noting that his bill was already 8 times the normal monthly charge with 25 days remaining in the bill cycle. “I sat in the dark and barely used my heat. We must demand relief for these bills. It’s so criminal and evil.

Surprising fact

In their last meeting before the snowstorm, senior ERCOT officials spent just 40 seconds discussing the approach of the cold front and the organization’s readiness, the Austin statesman reported.

To monitor

Texas lawmakers will hold a joint hearing Thursday to discuss the reliability of the state’s grid and the conditions that led to the massive price hikes. State Representative Donna Howard (D) said Texas House should address the impact of deregulation on Texas utilities. ERCOT is ready to testify.

Further reading

Griddy Customers Face $ 5,000 Electricity Bills During 5 Frosty Days in Texas (Dallas Morning News)

The two hours that nearly destroyed the Texas power grid (Bloomberg)

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