Arthur D’Andrea, the new chair of the PUC of Texas, stated on Friday that he will not fix the energy market prices that were overcharged by ERCOT to the tune of $16 Billion. Generators were allowed to charge upwards of $9,000 per MW for longer than they were supposed to during the ERCOT emergency. Mr. D’Andrea stated that going back and changing the prices that day could hurt more people than it would help. He stated that it seems like you would be helping the consumers by re-doing the overcharges, but in reality, you could be bankrupting a co-op or city.
Mr. D’Andrea plays hard to get and wants us to guess why he didn’t change $16 billion overcharge
I really wish he would explain more in detail how that justifies a $16 billion overcharge. You’d think the 1 person with the power to reverse a $16 billion dollar overcharge would be required to go into more detail in his thought process on the matter. It seems as though in the Texas energy market, up is down and down is up. According to him it is a “simplistic” view that fixing the overcharge will be good for the market and consumers. I would appreciate to know what the complicated reasoning is and how cities and co-ops would be bankrupted.
The answer is in the PUC filings
Well I answered my own question by going to the PUC filings and reading the letters myself. I didn’t read all of them, but I would have to say a majority were requesting the prices to be changed. There were a handful of companies that didn’t want the prices changed and most of them were on the generator side. There was one very responsible REP who didn’t want the prices changed, surprisingly. They had planned ahead and thought that their competitors should suffer for their lack of insight in the market and lack of hedging. Both sides seemed to have pretty good reasons, but its hard not to point out that the generators are the ones profiting from the price increase and they were also the ones who didn’t want the prices to be changed back to a reasonable amount. Calpine – a large generator, and Rockland Capital – a company that invests in generators, both agreed that the $9,000 MW price overcharge should not be changed. I’m still not sure how cities and co-ops would be bankrupted because unless if they generated power and paid more than $9,000 per MW to make it, then it seems like they wouldn’t be affected much?? I believe Capline stated that in some cases it cost them as much as $4,200 per MW to generate the power, but that’s still like half what they were charging for it.
Retail Electric Providers are begging and pleading for help, while Generators hit the jack-pot and get to keep a $16 billion overcharge
There were many REPs with dramatic letters begging and pleading for the Commission to change back the pricing to prevent “catastrophic” losses to the market. It is obvious that the REPs are the ones who are suffering from this price issue and the generators are profiting hugely. According to Texpo, “Generators long by even 1,000 MW made $864,000,000.” They had an interesting take on the matter and suggested that REPs sue the generators instead of going through the PUC for relief. Although they mentioned that “The generators, with their huge wealth reserves and non-transparently run trade desks, are difficult to prosecute as is.”
What customers are saying: “THEY TRIED TO KILL ME!”
The winner was a letter from a Texas resident regarding Ancillary Charges. Steve V. pointed out that the ancillary costs charged by ERCOT would be passed through to him. This was not acceptable because they had just tried to kill him and were being allowed to charge him for the privilege. He asked why the utilities were not paying for this with their contingency fund which they have been building over the years of fees. He then asked: “They have a contingency fund, right?” Well Steve you would think that they would, but who the hell knows at this point. For all we know, some guy on hill has a giant safe full of money that he goes swimming in from time to time, like on the Donald Duck show.