As Texas begins to dig its way out from under the effects of the recent winter storm, officials are trying to find a way to make up for the costs of electricity. Customers in the Lone Star State are looking at huge power bills, and it is unclear exactly who will be left holding the bag.
Michael Weber, a professor of energy resources at the University of Texas, said, “Taxpayers, shareholders, customers are all going to pay in some way, but it will take time for the details to emerge.”
Texas Gov. Greg Abbott has recently announced that the Texas Public Utility Commission has placed a moratorium on supply disconnects for nonpayment. The Governor has also met with legislators to see how the state can help reduce the financial burden the cost of electricity has placed on consumers.
President Biden placed his signature on a major disaster declaration for the state. This will provide federal assistance for the cost of temporary housing and repairs to homes. Texas Republican Rep. Michael McCaul has stated the plan is to use federal assistance to correct building damage and cover electricity bills.
Hell to Pay
The Mayor of San Antonio, Ron Nirenberg, said in a Sunday interview that there will be “hell to pay” if residents of the state are expected to pay the bill for the skyrocketing cost of electricity.
The mayor went on to say it would be an unconscionable act for bills to be put on the backs of Texas residents who have been left to suffer and freeze in their homes through no fault of their own.
Electricity Demand Spiked as Temperature Dived
As temperatures dropped well below freezing, the electricity demand spiked. The price of wholesale power rose to a staggering $9,000 per MWh. The typical cost during the winter season in Texas averages $50 per MWh.
ERCOT (Electricity Reliability Council of Texas) manages the power supply for about 90 percent of the state’s residents and businesses. They stated the generators in the state were unprepared for the winter storm. As such, they were not in a position to produce sufficient energy to meet the demand.
Customers who had opted for a rate plan that changes as wholesale power rates change found their bills went up by a factor of ten. The owner of a three-bedroom home in the Fort Worth area said his bill was $17,300 when it is typically about $150 per month.
The homeowner emailed their wholesale power provider and closed the account, saying, “I cannot afford this. What can I do? What do I need to do?” The homeowner added, “We have children and other expenses.”
Prices are Driving Companies into Bankruptcy
Spikes in the price of electricity have already driven at least 20 companies into bankruptcy during the last two decades. The result is a handful of dominant players, including Vistra and NRG Energy, this according to Jay Zarnikau. Zarnikau was once the director of electric utility regulation. He is now an economist at the Lyndon B. Johnson School of Public Affairs in Austin.
In the last couple of days, Just Energy has said it may run into trouble covering some $250 million in costs directly related to the storm. Dallas-based Atmos Energy stated it is considering raising cash as it spent $3.5 billion to purchase fuel during the storm.
As Texas homeowners face cleaning up after the storm, they are unsure when help for their electric bills will arrive.
WeInvests is a financial portal-based research agency. We do our utmost best to offer reliable and unbiased information about crypto, finance, trading and stocks. However, we do not offer financial advice and users should always carry out their own research.
Read More
