The following editorial published in the Houston Chronicle on May 13:
It wasn’t enough for Texans to shiver for days in our heatless houses. It wasn’t enough to miss work for lack of internet. For Mom and Pop to shutter their already struggling business. For homeowners to face broken pipes and water damage. For ratepayers to face sky-high electric bills. For us to wait in line at the grocery store for water because the stuff coming out of faucets was contaminated.
It wasn’t even enough for nearly 200 people to die, some freezing to death in their beds, during Texas’ devastating winter blackouts.
Now, lawmakers expect ordinary Texans to pick up the bill for the government’s incompetence and the private sector’s greed.
After months of testimony, legislative debates and finger-pointing, it’s still anyone’s guess what solutions will become law. But it’s clear who will pay for some of them: consumers, who never voted for Texas’ wild west energy market in the first place and bear no blame for February’s statewide calamity.
Last week, the House approved a $2.5 billion plan to bail out Texas electricity entities at risk of defaulting on debts from the storm. The bill would impose an undisclosed fee on electricity companies, which would be passed on to residential and business ratepayers and the proceeds would be used for bonds to help cover the costs.
It was Gov. Greg Abbott’s appointees at the Texas Public Utility Commission, the elected Railroad Commissioner Christi Craddick and the bureaucrats at ERCOT, the state’s grid operator, whose cascade of failures brought Texas’ grid within seconds of complete collapse.
Indeed, it was government’s fumbling that we now know made a terrible situation worse. The Wall Street Journal reported last week that while ERCOT was desperately trying to meet surging demand amid dwindling power supply, it inadvertently paid natural gas companies to go offline.
ERCOT said that when it activated a program that pays large industrial power users to reduce consumption during emergencies, it didn’t know the list of participants included key pieces of natural gas infrastructure needed to generate power: “We do not know what type of facility it is,” Kenan Ögelman, ERCOT’s vice president of commercial operations, told the Journal.
Who pays for that shoddy bookkeeping? Consumers.
It’s ratepayers, including those who chose fixed-rate energy plans and have thus far avoided higher costs, who could end up with a line-item expense on their monthly bills for years or even decades to compensate, in part, for the billions that electric coops and other entities were charged for power during the state’s astronomical energy pricing that turned out to be both unnecessary and woefully ineffective at luring more power onto the grid.
The added sum on each bill isn’t likely to make many eyes bulge but the unfairness of the charge irks consumer advocates, especially since it isn’t going to anything constructive.
“You’re putting a lien on future generations who are still going to have to pay for what went wrong,” says Tim Morstad, who tracks utility policy at AARP. “It’s a cleanup cost. Those billions of dollars aren’t going to make the gas supply more reliable by making those improvements or making the power generation facilities hardened to be able to withstand cold better.”
A bill to retroactively re-price energy during a point in the storm when ERCOT, the state’s grid operator, left it in place long after the emergency was over, had passed the Senate but was shut down by House Speaker Dade Phelan. The fallout has been severe with several entities in bankruptcy.
Somebody’s got to bail them out. Why not consumers, who unlike industry, have very little voice in any aspect of Texas’ system, from the ERCOT board to public utility regulation?
And it won’t just be Texas consumers. Our energy market is so big that the winter freeze that crippled our energy grid had a broad impact, with gas utilities as far north as Minnesota complaining that spiking gas prices left them, and potentially their customers, with an$800 million bill.
“The ineptness and disregard for common-sense utility regulation in Texas makes my blood boil and keeps me up at night,” Katie Sieben, chairwoman of the Minnesota Public Utility Commission, told the Washington Post in a story last month. “It is maddening and outrageous and completely inexcusable that Texas’s lack of sound utility regulation is having this impact on the rest of the country.”
We couldn’t have said it better.
Beyond the sudden and calamitous price surges, Texas’ big failing ahead of the storm was its refusal to require energy companies to winterize their facilities. The state didn’t require it and the companies didn’t bother to do it on their own. And who will pay for it?
Meanwhile, taxpayers across the nation could technically compensate Texas for its poor planning if bipartisan legislation by Sen. John Cornyn and U.S. Rep. Eddie Bernice Johnson, D-Dallas, succeeds in supplying federal taxpayer funds to cover winterization that private companies should have completed long ago.
Mandated weatherization itself is probably the most important provision in any of the bills addressing the winter storm. Abbott has thrown his support behind the effort and legislation has even included hefty fines for noncompliance. Lawmakers should resist pressure to cut deals with oil and gas or any other industry seeking to squirm out of investing in basic insurance against predictable extreme weather events.
It’s the least, the very least, lawmakers can do in a session that has been pathetically short on real action. Legislation that offered fundamental market reform went nowhere, so Texas’ system still incentivizes crisis with high profits for producers.
And no legislation being seriously considered appears to prevent another blackout.
“I don’t know any lawmakers who will say this won’t happen again,” Morstad says.
In what world is it OK for consumers to pay a heavy price for such a paltry result?