The Texas Electric Reliability Council overcharged utilities by $ 16 billion during the week of winter storm Uri, which left millions of Texans without power.
The billing error was discovered by Potomac Economics, an independent market monitoring entity for the Public Utility Commission of Texas, which itself monitors ERCOT.
According to Bloomberg, Potomac Economics determined that ERCOT kept its market prices for electricity too high for almost two days after the massive blackouts across the state ended.
The energy monitor said ERCOT should have reset its energy prices the day after it recovered from the majority of the blackouts.
ERCOT’s decision to leave the price unchanged resulted in a $ 16 billion error.
With the Texas power grid under private control, electricity prices fluctuate based on demand. During the storm, the electricity supplier was tasked by the State Utilities Commission to set wholesale electricity prices at $ 9,000 per megawatt hour.
This price is the maximum that grid operators can charge, which is supposed to induce state power companies to add more electricity to the grid.
However, due to ERCOT’s inability to lower prices again, it forced power companies to buy electricity at the inflated rate for days. This cost was passed on to the customers of the electricity companies.
Due to the error, struggling utilities that had to purchase electricity at the highest rate may default. Carrie Bivens, vice president of Potomac Economics, suggested that ERCOT remove the pricing intervention that occurred at the end of the outages.
Patrick Woodson, CEO of ATG Clean Energy Holdings, told the Texas Tribune that ERCOT’s market model for the provision of public services was not designed to be effective during a disaster such as a storm.
“The ERCOT market was not designed to cope with an emergency of this magnitude,” he said.
Mr Woodson said that ERCOT’s pricing error “pushed the whole market to the brink of collapse.”
During a hearing at the Texas Statehouse in Austin on Thursday on the state’s near collapse of the state’s electricity grid, industry experts warned that the electricity market faces extreme challenges.
“The market is facing a financial crisis and it is a very serious financial crisis,” said Catherine Webking, executive director of a pressure group for the electrical industry.
She said there would be an “insurmountable” level of financial distress when natural gas and financial security bills were fully met by energy companies in the coming weeks.
ERCOT did not immediately respond to a request for comment.
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