EnergyStatewide NewsSome Texans Face Exorbitant Utility Bills After Winter Storm, But Most Will Not

The PUC issued an order on Sunday prohibiting the disconnection from power of customers who cannot pay their bills.
February 22, 2021
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When Texans next open their mail or inboxes to find their monthly utility bills, many can expect a shockingly higher number than normal. Due to the near-statewide crisis wrought by last week’s winter storm, wholesale electricity prices skyrocketed as demand climbed and supply shrank.

Prices on the Electric Reliability Council of Texas (ERCOT) market increased over 22,000 percent during the four-day stretch beginning Monday and ending Friday morning. After the announcement from ERCOT that the council was ceasing all emergency conditions such as load-shedding — reducing the number of households pulling from the grid, i.e. instituting strategic blackouts — and requesting electricity conservation, prices plunged dramatically.

They dipped so dramatically that by mid-morning Friday the prices were back at, or below, their pre-blackout levels.

Now, how much those wholesale prices trickle down to the bills of individual customers depends on the contract and rates negotiated with each particular utility company. But for a rough estimate based on average electricity consumption in a day, during the two- to three-day stretch of prices at their $9,000 per megawatt-hour (MWh) cap an individual consumer might expect to consume $270 dollars-worth of electricity each day.

What an individual sees on their bill will vary based on their own plans and consumption during those days of premium electricity.

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For instance, if a plan is a flat, monthly charge, then the customer will likely not see any increase in the consumption part of their bill — however, an increase may come in the form of an added fee, but that will depend on the given utility provider.

This kind of situation, while extreme, is exactly the kind which a flat rate is designed to protect against. It is essentially insurance against potential volatility of electricity prices — pay more for security against unforeseen, emergency costs later.

The other group who may not see a bill increase are those unlucky many who were without power throughout most, or the entirety of, the crisis.

But those who did have power, whether sustained or intermittent, may pay a hefty price in their next utility bill. The wholesale price hike will likely be compounded by increased consumption which may have occurred had a household hosted others who were out of power.

One particular kind of utility customer specifically faces exorbitant charges.

For customers of Griddy, a utility provider with a different kind of business plan — selling customers wholesale electricity at cost for what Griddy pays on the ERCOT market — runaway wholesale costs have yielded bills in the tens of thousands of dollars during this past week.

One customer, for example, faces a $17,000 electricity bill. In a post on its website, Griddy points the finger at the Public Utility Commission’s (PUC) directive that wholesale prices match market scarcity, the post states, “The market is supposed to set the prices, not political appointees.”

Before that directive, wholesale prices were floating in the low thousands — still much higher than their typical rate between $30 and $50 per MWh.

In a notice, the PUC stated of the decision, “a computer glitch was preventing that maximum price from being applied.”

“Because this penalty was not being applied, the power dispatch system was actually taking megawatts off of the grid.”

Customers of the Pedernales Electric Cooperative will not face a rate change per kilowatt-hour during this past week, but electricity charges may be higher than usual based on usage increases.

For those using Reliant Energy, one of the largest electricity providers in the state, preliminary bills initially show high usage levels even for those who were without power. But the company says the discrepancy may stem from “smart meters” being out of service with the blackout. Once connection is restored, the actual consumption totals will be reflected.

But Reliant has no other information on its website about potential bill increases.

For the most part, any customer with a base rate per kilowatt-hour of usage will not face the types of increases as Griddy customers — but if usage increased, then so will the bill.

None of these details are entirely ironed out and the state is likely to discuss the matter in some capacity during the ongoing legislative session.

In addition to its monitoring duties, ERCOT is effectively a marketplace on which electricity is passed from generator to utility company, which then passes it onto individual consumers. ERCOT facilitates that transaction for a fee.

Some areas, like North Texas, have numerous different utility providers. And some, like Austin, Denton, and San Antonio, have only one usually run by the city in some capacity.

During the PUC’s Sunday emergency hearing, the agency prohibited the disconnection of a customer from the local utility service for non-payment of a bill. The order is continual until further notice from the PUC.

Despite the now-warmer temperatures and the lions’ share of customers regaining power, the effects of last week’s crisis will be felt for some time — not least by citizens’ pocketbooks.

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Brad Johnson

Brad Johnson

Brad Johnson is an Ohio native who graduated from the University of Cincinnati in 2017. He is an avid sports fan who most enjoys watching his favorite teams continue their title drought throughout his cognizant lifetime. In his free time, you may find Brad quoting Monty Python productions and trying to calculate the airspeed velocity of an unladen swallow.