How the Texas Legislature could reform the state's power grid this session - The Texas Tribune

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Most Texans will likely have higher charges on their power bills for years to come to cover gas utilities', electric cooperatives' and electric companies’ financial losses from the storm and prevent customers from having to pay huge bills in a short time.

Lawmakers are close to passing bills that would allow companies to seek billions of dollars in state-approved bonds backed by charges on customers’ bills to stabilize the state’s distressed energy market.

After state electricity regulators set power prices at the maximum rate, $9,000 per megawatt-hour, and natural gas fuel prices spiked during the storm, many companies — especially natural gas utilities and rural electric cooperatives — were financially wrecked. Others owe massive debts to the Electric Reliability Council of Texas.

Lawmakers may soon approve around $4.5 billion in ratepayer-backed bonds for natural gas utilities and another $2 billion in such bonds for electric cooperatives.

The Senate also approved a proposal in the early hours of May 27 to allow electric companies, including retail electric providers, to finance an additional $2.1 billion for electricity that companies paid for but never received during the storm, as well as additional charges from the high wholesale power prices. The Senate has pushed hard for a financial remedy to the infamous 32-hour period during the week of the storm when regulators kept wholesale power prices at the $9,000 cap after more electric generation came online. Many people dubbed that controversial decision a regulatory pricing error.

Additionally, House Bill 4492 would loan $800 million to ERCOT through the State's Economic Stabilization fund, known as the rainy day fund, to pay for debts to the grid operator. ERCOT acts as a transaction house for the electricity market, so when companies couldn't pay their debts after the storm, other companies got shorted for the electricity that they sold. ERCOT will pass on the cash to companies that are owed money.

The state's rainy day fund ended 2020 with a balance of nearly $10 billion.

The House and Senate still have different proposals for the mechanisms of how all of the financing proposals will work. The details will soon be discussed behind closed doors in conference committees.

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How the Texas Legislature could reform the state's power grid this session - The Texas Tribune
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