Gov. Abbott to Blame for Billions in High Electric Prices, Former Grid CEO Says

Gov. Abbott to Blame for Billions in High Electric Prices, Former Grid CEO Says
Photo: Eric Gay, AP

It’s Texas Governor Greg Abbott’s fault that power prices during the state’s deadly 2021 winter storm shot through the roof even as the crisis was ending, a former top official with the state’s power grid testified Wednesday. This claim contradicts the official line from the governor’s office, which has maintained that Abbott had nothing to do with the decision that cost ratepayers billions of dollars.

Bill Magness, the former President and CEO of the Electric Reliability Council of Texas (ERCOT), which runs the state’s power grid, took the stand this week in bankruptcy court as part of a hearing brought by Brazos Electric, an electric co-op based in Waco. At the centre of the mess is a key decision made by ERCOT during last year’s historic winter storm to keep electricity prices high, even as outages were ending across the state, for more than a day after things started to return to normal.

That move ultimately cost power providers an extra $US16 ($22) billion in costs; Brazos, for its part, is claiming that the decision cost it $US1.9 ($3) billion alone, which dragged it into bankruptcy. (Power companies, of course, aren’t the only ones who got the short end of the stick in this move. Some customers also saw astronomical power bills following the storm.)

After last year’s deadly storm left millions of Texans without heat for days and exposed enormous, underlying problems with the state’s electric grid, ERCOT cleaned house. While some of the organisation’s officials went gracefully, Magness dug in, defending ERCOT’s decision to selectively cut power for some customers during the cold snap before ultimately being given the boot by the board.

But Magness’s testimony on Wednesday shed new light on how those fated days may have actually gone down. During the final days of the storm in mid-February, power prices were capped at more than 150 times normal at $US9,000 ($12,494) per megawatt hour. Magness is now saying that the decision to keep those rates even as power plants were coming back online came from the governor. He testified that the now former Public Utility Commission Chairwoman told him that “the governor had conveyed to her if we emerged from rotating outages it was imperative they not resume. We needed to do what we needed to do to make it happen.”

The decision to keep prices high in the final days of the crisis, Magness said, was an attempt by the PUC to encourage power plants to come back online and to keep big power users like industrial facilities offline, in order to conserve emergency power reserves. However, the move to keep prices so high for so long and the enormous resulting cost to the system has been widely criticised by watchdogs as ill-advised and exceeding the scope of the Commission’s power — and, it seems, no one wants to step up to the plate to take the blame. (By the way, big out-of-state banks, including Bank of America, Morgan Stanley, and Goldman Sachs did profit from the inflated prices, and were caught on a recorded call last year with a former Public Utility Commission employee who assured them he was working to help them keep their profits.)

At a meeting last year on ERCOT’s role in the mess, a spokesperson for Abbott said the governor’s office had nothing to do with the decision — despite an aide from Abbott’s office being at ERCOT headquarters at the time the decision to keep prices high was made.

“As Texans would expect, Governor Abbott instructed everyone involved that they must do what was needed to keep the power on and to prevent the loss of life,” a spokesperson for Abbott told the Houston Chronicle Wednesday. “This is the same instruction Governor Abbott gave to the PUC and ERCOT (during a cold snap) earlier this year: Do what needs to be done to keep the power on.”

Democratic candidate Beto O’Rourke, an opponent for Abbott in Texas’ upcoming gubernatorial election has long been campaigning on the government’s failures during the blackout. O’Rourke released several tweets blasting Abbott’s involvement in the decision. Given how easily Abbott threw around falsehoods about wind energy’s role in the blackouts and has consistently overpromised on the grid’s solidity, we wouldn’t be surprised if he was fudging the truth when it comes to this too.