Tag Archives: ERCOT

If You Thought It Couldn’t Get Any Crazier, Think Again!

By Bill Oakey – March 28, 2021

The U.S. Congress took up their investigation of the Texas power blackout last week. And the bumbling, bungling shenanigans of Texas officialdom went on full display. When you read the editorial below, ask yourself this question – If you owned a large Texas business, would you hire any of the numbskulls from ERCOT, or the political hacks that interact with or pretend to oversee them? The gang that couldn’t shoot straight was called upon the carpet in Washington. Here’s what happened…

Editorial – The Houston Chronicle

By the Editorial Board, March 28, 2021

Texas leaders, get tough on grid security

Human mistakes shut off the electricity. Now the humans in charge must do their jobs.

It wasn’t the wind turbines. It wasn’t natural gas. It wasn’t coal that was to blame in the blackout that killed 111 people across Texas.

The truth is all those power sources went offline at some point during last month’s winter storm, not because they were “renewable” or “base load” or “liberal” or “conservative” fuels but because generators and pipeline owners chose not to weatherize their equipment for a predictable winter storm. Some gas operators chose not to fill out a simple two-page form to exempt their operations from losing power during rolling blackouts and other shortages.

They chose not to do these things because nobody in Texas government required them to.

Let’s stop wasting time, as U.S. House members did in a hearing last week, bickering over which political party’s preferred natural resource saved the day and which caused death and destruction.

The culprit was not vegetable or mineral. It was human.

It was the people in Texas government who had the duty to secure Texas’ power grid and refused. The people who had the power to protect millions of Texans from an accident waiting to happen and opted to just let it happen. The people who chose not to require that companies delivering life-sustaining energy do so responsibly, opting instead to make basic emergency planning optional.

It is elected officials, political appointees, and well-compensated executives who, more than a month after the catastrophic failure of Texas’ power grid, refuse to take true responsibility or move with urgency to fix the problems.

The shameful show of finger-pointing and shallow concern hit the national stage Wednesday as several Texas officials testified before Congress on the impact and causes of February’s storm.

One moment served as a glaring allegory of Texas deflection: Railroad Commission Chairman Christi Craddick was asked whether she, as the state’s top oil and gas regulator, would start requiring operators to fill out a short form that keeps their power from being shut off during outages.

The question by U.S. Rep. Marc Veasey should have been a no-brainer. Craddick herself had testified that in the middle of the blackouts, crews returning to gas fields found they couldn’t restart production because they’d lost power for their equipment.

“Frozen roadways prevented crews from going out, but the No. 1 problem was a lack of power at the production sites,” she said.

That problem, as Houston Chronicle reporters Jay Root, Eric Dexheimer and Jeremy Blackman reported this month, was the result of gas production plant owners not filling out simple paperwork to become designated as “critical facilities,” making them exempt as hospitals are from having their power cut so they can keep supplying fuel to power plants.

Even so, Craddick wouldn’t commit to requiring the form, only saying that her agency had sent letters to all operators “suggesting” that they file it. She also insisted that she hadn’t “realized this form existed” before the winter storm and that power grid operator ERCOT should have done a better job getting the word out about the exemptions. Never mind that her name was on the letterhead of a 2013 Railroad Commission memo explaining the exemptions and urging natural gas facilities to apply.

“But do you don’t think it should be required?” Veasey pushed back.

Craddick continued to dodge the question, pivoting again to her favorite punching bag. She blamed ERCOT for not prioritizing oil fields for such exemptions, and tried to claim they only were available to processing plants anyway. While the 2013 letter uses the term “facilities,” it also states clearly that “high volume gas wells are examples of such facilities.”

Letting industry police itself is a basic tenant in Texas’ laissez-faire approach to oversight. But while expense may be behind Craddick’s previous refusal to require winterization of natural gas wellheads, it’s unclear what kind of burden she thinks filling out a free form that takes about two minutes to complete would impose on companies.

Veasey wasn’t having Craddick’s excuses.

“Republicans just want this problem to go away,” he said. “They don’t want to deal with this, they don’t want to require anybody to do anything, which means we’re going to be sitting in the cold again and that is the problem. They are running out the clock.”

Coming from a Democrat, that may sound like partisan rhetoric — except for the fact that the complacency and political cowardice he describes has all happened before. It set the stage for February’s disaster. And it will lead to another tragedy unless lawmakers resolve to finally act this session.

Just as Gov. Greg Abbott and lawmakers knew Texas’ grid was vulnerable in winter without proper weatherization, Texas oil and gas regulators knew that gas suppliers had their power cut during the state’s last major freeze in 2011. A federal after-incident report had warned that communication gaps between gas and electric companies should be fixed to prevent it from happening again.

A state report in 2012 said the same thing, with regulators at the Texas Public Utility Commission and Railroad Commission concluding that “cascading” grid failures could happen if companies that provide fuel for power generation lost power themselves. That’s exactly what happened in February.

The former PUC regulator who oversaw that 2012 report, Jennifer Hubbs, told Chronicle reporters she was shocked to realize during the storm that her simple recommendations hadn’t been followed.

“I’m on Twitter and I see a photo of downtown Houston lit up like a freakin’ Christmas tree and all the houses around it dark. It hit me like a physical blow,” she told the Chronicle. “You know, we might have avoided rotating outages entirely if we had just approached it with some sense.”

Sense. It’s something as scarce in Austin these days as toilet-flushing water during last month’s storm.

It is not government overreach or far-left sabotage to require energy companies to engage in basic emergency planning. It’s the least a government can do to protect its residents from a harsh winter storm or even an attack on our power grid from a foreign adversary such as Russia or China.

Abbott needs to lean on lawmakers to require safeguards, lawmakers need to pass them, and elected leaders such as Craddick need to stop leaving Texans’ health and safety to chance and voluntary compliance.

Why should Texans put up with leaders whose loose regulations leave us vulnerable to everything from random chemical explosions to prolonged blackouts that put our homes, our businesses and our loved ones in harm’s way?

Leaders, do your jobs, not industry’s bidding. Texans don’t deserve to live this way — or die this way, either.

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My Recommendation: The Legislature should make sure that the form is easily accessible. Right now, once an entity submits it, they are permanently registered. If their status changes, or if they are new to the system, they need to submit an updated form. I recommend that the Legislature set an annual fall deadline to submit the form. Failure to do so should be greeted with a stiff fine. Here’s what’s so crazy – It’s in a company’s best interest to submit the form. They’ll sell more gas during the power outage (!) If the right hand is unable to help the left hand, perhaps either Alexa or Siri could help with a friendly reminder..

Get Your Wooden Nickels Ready – Here Comes the Jukebox!

1. “All Right, I’ll Sign the Papers” – Mel Tillis
2. “I’ve Always Been Crazy” – Waylon Jennings
3. “Still Crazy After All These Years” – Paul Simon
4. “No Place But Texas” – Willie Nelson
5. “Texas In My Rear View Mirror” – Mac Davis

Dallas Morning News Blows The Lid Off ERCOT’s Sordid History!

By Bill Oakey – March 26, 2021

Strap yourselves in for a wild ride, folks! If you think you’re heard everything…Nope, not even close. No wonder this guy won a top journalism award. What in the ding-dong-dang are the politicians going to do now!??

Dallas Morning News Watchdog Column – By Dave Lieber, March 26, 2021

In 20 years, ERCOT has been a misbehaving, secretive, arrogant, even criminal grid operator

Looking at the history of the state’s all-powerful electricity overseer, The Watchdog finds a pattern of failure.

ERCOT, the operator of the Texas electric grid, has been a problem child since the state’s electricity market was deregulated at the turn of the century.

When it comes to the Electric Reliability Council of Texas, incompetence and lack of accountability and oversight is nothing new.

If you know your history, you shouldn’t be surprised about what happened in last month’s cold-weather catastrophe.

The power to bring us electricity rests in the hands of a nonprofit, mostly invisible group whose leaders claimed we were a mere 4 minutes and 37 seconds from a massive blackout that could have shut the grid down for months.

Texans wonder why it would take months. It takes that long for replacement transmission towers to be built shipped, placed and powered up.

With the help of The Dallas Morning News Archives and a history book by R.A. “Jake” Dyer of the Texas Coalition for Affordable Power, let me show you year by year how bad it has been.

It might make you wonder why we don’t throw up the white flag and join the interconnected national grid.

2001: Tasked with creating a pilot program to handle the new deregulated system that began that year, ERCOT blows it by going over-budget and failing to meet goals. Customers who wish to switch electricity companies are blocked. Bills generated by ERCOT are wildly inaccurate. Its budget, built on fees paid by electricity customers, is hatched in secret.

That year, the first price spike to the maximum-allowed cap hits customers, but ERCOT says it won’t happen again. Yet it happens again and again in the next few days.

2002: About a quarter-million customers do not receive bills, sometimes for months. An expensive marketing campaign promoting the new deregulated system is delayed because ERCOT can’t handle the influx of consumers wanting to switch companies.

A peek at financial statements shows ERCOT’s average salary with benefits is $99,000. Employees receive a $10,000 travel allowance. Critics pounce on ERCOT’s sponsorship of a minor league hockey team as frivolous. After promising to cut back, ERCOT asks that its customer-paid fees get doubled.

2004: This is — aside from 2021 — ERCOT’s worst year. The Dallas Morning News reveals a massive procurement scandal at ERCOT that will lead to criminal convictions. Fake companies are created by several ERCOT managers, and millions of dollars are siphoned from ERCOT funds. Legislators blast ERCOT’s weak financial controls and complain about “perceived arrogance among top officials in the face of these problems,” Dyer writes.

2005: A grand jury indicts six ERCOT managers. They include the chief information officer, director of information technology, data warehouse manager, director of program development and physical security manager. The sixth, a former FBI agent, is responsible for corporate security. The men use the stolen money to buy boats, luxury homes and expensive cars.

“The maze of illicit business dealings going on within ERCOT over a year’s time is simply stunning,” the Texas attorney general says. “This is not about electricity. It’s about corruption at top levels of ERCOT.”

The AG at the time? Greg Abbott.

In response to the growing scandal, the Legislature gives all oversight of ERCOT to the Public Utility Commission.

2006: Running out of power on an April day, ERCOT launches, without public warning, rolling blackouts. Even the PUC, which supposedly oversees ERCOT, isn’t notified. Under fire, ERCOT’s chief executive resigns. On the criminal front, the indicted managers are convicted and some are ordered to pay fines, while others are sent to prison.

One state senator says: “There’s an ongoing, cavalier attitude over there [at ERCOT] that you are a standalone entity and not responsible to the people of the state.”

2009: Bills to rein in ERCOT are introduced at the Legislature, but they do not pass. ERCOT’s CEO resigns, the fourth such resignation since 2000.

2010: A consultant’s report finds ERCOT is hindered by “poor corporate governance, leadership and culture.” The consultant finds that ERCOT has too many employees and recommends that 166 get cut. ERCOT cuts 37. A state report finds poor financial oversight, questions ERCOT’s large debt (more than $300 million) and suggests removing industry representatives from the board.

2011: An icy cold snap hits during Super Bowl week, but ERCOT isn’t prepared, resulting in rolling blackouts. Similar cold weather problems occurred in 1983, 1989, 2003, 2006, 2008 and 2010. Meanwhile, during the summer, the state keeps setting records for hot-weather usage. A bill that gives the PUC even more oversight of ERCOT dies in the Legislature.

2015: New electricity demands break records. ERCOT lifts the regulatory cap to its current $9,000 per megawatt-hour. Originally, until 2011, the cap was $1,000 per megawatt-hour. ERCOT’s cap is the highest in the nation.

2018: ERCOT planners predict that generators will note the state has lower reserve margins of power and build new power plants to make profits and boost energy supplies. Because of this, they say, Texas will have a much stronger system by 2021. Oh, well.

2019: The $9,000 cap for wholesale electricity is hit twice, once in May and once in August. “Such high prices eventually trickle down into home rates,” Dyer writes.

Texas’ population of 29 million people is projected to grow by 2050 to 55 million. Can the current system handle the added power load? Why isn’t anyone talking seriously about joining the national grid?

The Watchdog took the “P” away from the (p)UC because the commission doesn’t care about the public. Watchdog Nation member David P. Bader of Dallas suggests, “Going forward, until some meaningful reforms are made, you should refer to ERCOT as E(r)COT since “reliability” doesn’t appear to be part of their purview.”

Done. Considering its sketchy past and dangerous present times, you have to wonder if E(r)COT can handle the future.

News researcher Alyssa Fernandez contributed to this report.

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Blog Special Feature – Songs From the ERCOT Jukebox

1. “Ain’t No Honky Tonks in Jail” – George Goss (Totally Hilarious)!
2. “Shame and Scandal” – Shawn Elliott
3. “Shame, Shame, Shame” – Cher & Tina Turner
4. “In the Jailhouse Now” – Johnny Cash
5. “Mama Tried” – Merle Haggard

ERCOT’s Pricing Structure Must Be Reformed – Here’s Why

By Bill Oakey – March 25, 2021

During the winter storm, we were all told why the price of electricity sold through ERCOT was increased to the maximum rate. We were told that it’s a demand-based system. The high prices were designed to incentivize energy producers to build more capacity and supply more power to the grid.

Well, Texas utilities did their part. They paid the outlandish price of $9,000 per megawatt-hour, which is 250 to 300 times the normal rate of $30 to $35 per megawatt-hour. These astronomical prices continued for 32 hours after the storm ended. The Washington Post reported that nearly $50 billion in electricity sales were generated during the week of the storm. To put that $50 billion figure in perspective, it’s over 3 times the entire annual budgets of Austin, San Antonio, Dallas and Houston, combined! Check the numbers and sources below for this fiscal year’s budgets:

Austin: $4.2 billion
San Antonio: $2.9 billion
Dallas: $3.8 billion
Houston: $5.1 billion
Grand Total: $16 billion, times 3 equals $48 billion

A wave of bankruptcies and lawsuits are unraveling by the day. Many Texas consumers will see higher electric bills, stretching far into the future, as pass-through power supply adjustment charges are recalculated several months from now. San Antonio’s electric utility is considering spreading these charges over an entire decade, to make the rate jolt less onerous. Close your eyes and contemplate what would happen if ERCOT sees no reforms, and we get another severe winter storm in the next year or two.

So, here is the one big question that begs to be answered:

How Many New Weatherized Power Plants, and How Much New Capacity Will Texans Get, After Paying All Those Tens Of Billions Of Dollars?

We have a right to expect a precise answer to that simple question from the likes of ERCOT, the Public Utility Commission, and the folks at the State Capitol who gave us an independent power grid with these pricing policies. Otherwise, how could they possibly justify keeping ERCOT’s current pricing model in place? Exelon Corp., which lost close to $1 billion, told the Washington Post that it may consider leaving Texas unless its market system is reformed.

So far, we haven’t heard a word from the folks who walked away with windfall profits about building us the new generating capacity that we were promised. And they are not required to do so under the weak Texas laws. As soon as this blog receives the list of power plants and their capacities, we will publish it here in detail.

If You Would Like to Wade Into the Weeds of the Data

Here is a bucketful from the U.S. Energy Information Administration. You won’t find anything close to ERCOT’s $9,000 per megawatt-hour peak prices.

Musical Accompaniment for This Blog Piece

1. “Such An Easy Question” – Elvis Presley
2. “A Lover’s Question” – Clyde McPhatter
3. “What a Price” – Fats Domino
4. “96 Tears” – ? and the Mysterians
5. “What Did I Promise Her Last Night?”– Mel Tillis
6. “Promises Promises” – Lynn Anderson
7. “When” – The Kalin Twins
8. “The Twelfth of Never” – Johnny Mathis

What You Haven’t Been Told About The ERCOT $16 Billion

By Bill Oakey – March 22, 2021

In just 32 hours, after the winter storm was over, ERCOT billed enough electricity charges to fund the entire annual budgets of Texas’ four biggest cities combined. Read on for further details…

We know that the Big Boys on Wall Street are thrilled with their massive windfall in ERCOT’s utility pricing overcharges. They and our governor would like everyone else to just butt out now, and leave well enough alone. The Chairman of the Public Utility Commission was caught on a recording, promising to protect the Wall Street profits. The Texas Tribune recently published an article entitled, “Experts Fear Reversing Electricity Charges Will Make Things Worse.”

Why? Because “That might have a chilling effect on companies wanting to come in and invest money in Texas.” Those same “experts” insist that consumers would not be affected if the overcharges were paid back. So, we pay more when the price goes up, but if it came down, with a huge price correction, we would get nothing. Huh?

In Austin, over a dozen people were hospitalized with frostbite. Eleven feet were amputated, and five people had both feet amputated. They will be disabled for the rest of their lives. 

How Much Is $16 Billion…Really?

1. Take a guess at how much this year’s entire city budgets for Austin, San Antonio, Dallas and Houston add up to. Here’s the simple math:

Austin: $4.2 billion
San Antonio: $2.9 billion
Dallas: $3.8 billion
Houston: $5.1 billion
Grand Total: $16 billion (Holy cow!)

2. If you laid a bunch of $10 bills end to end in a line, that line would have to wrap around the world 6 times to total up to $16 billion! Here’s the math:

The earth’s circumference at the equator is 24,901 miles
24,901 miles converts to 1,577,727,360 inches
1,577,727,360” divided by 6.12” (length of any U.S. bill) = 257,798,588

That’s roughly a quarter of a billion single dollar bills. Those would wrap around the world 4 times to reach $1 billion. So, it would take 4 times 16, which is 64 times around, to reach $16 billion with $1.00 bills. For $10 bills, it would be one-tenth of that, which is roughly 6 times.

3. Austin Energy’s annual budget is now $1 billion. So, at the current rate, a $16 billion windfall would keep the utility running for 16 years!

Just take a deep breath and try to swallow this – In just 32 hours, after the storm was over, ERCOT billed enough electricity charges to fund the entire annual budgets of Texas’ four biggest cities combined! If that doesn’t tell you that we need serious reform of our power grid pricing system, then nothing will.

Two interesting questions – How many fully weatherized new power plants could be built with $16 billion? And how much of that money, plus the profits earned during the storm actually be used for that purpose?

We’ve heard a lot about “winners and losers.”  So, who are the winners, and what are they going to do with all that money? We deserve a full accounting of what happened to the entire $16 billion, including the $12 billion or so that was supposedly “settled.”

For the Readers: A Simple Multiple Choice Question

The assertion that Texans should shrug off ERCOT’s $16 billion in overcharges, because it wouldn’t make any difference is:

A. Tommyrot
B. Poppycock
C. Balderdash
D. Bull-Malarkey
E. All of the above

If you answered “E,” then congratulations, you passed the exam. But don’t expect any kudos from ERCOT, the Public Utility Commission or the Governor’s office. They are all out to lunch!

Musical Accompaniment for This Blog Piece

1, “Money Makes the World Go Round” – Liza Minnelli
2. “Around the World” – Connie Francis
3. “Miss Otis Regrets” – Linda Ronstadt
4. “Money, Money, Money” – Abba
5. “For Your Sweet Love” – Rick Nelson

State Needs To Resolve ERCOT Billing Kerfuffle

By Bill Oakey – March 17,  2021

Almost every day, news reports pop up with a different twist on the confusing numbers. How much did ERCOT really overcharge Texas electric utilities? First, we heard the staggering figure of $16 billion. This amount came from Potomac Economics, who monitors ERCOT’s market functions. As I noted previously, $16 billion works out to roughly $552.00 for every man, woman and child in Texas.

Before the ink was even dry on the newsprint, you could hear the whimpers and the hollers. City officials squawked, utility companies balked. Suddenly, that $16 billion figure began to morph into something much smaller. All sorts of numbers were tossed around. If you mix hard numbers with politics and powerful special interests, they become soft and squishy. Like something you would not like to feel between your toes, while stepping through a cow pasture.

Let’s Make Our Way Through the ERCOT Shuffle

Everybody pick a partner and form a circle. But please stay 6 feet apart, and keep your masks on.

1. We are told that ERCOT overcharged customers by $16 billion – after the storm was over.(Shuffle to the left and swing your arms around. Keep the circle moving clockwise).

2. The Public Utility Commission doesn’t initially deny the number, but refuses to order ERCOT to fix the errors – It would only create winners and losers. It’s too hard to “unscramble the egg.” (Shuffle to the right, take two steps, and kick your left foot forward).

3. Lt. Gov. Dan Patrick calls on ERCOT to repay the $16 billion, plus additional overcharges billed above the approved maximum rate. He cites RRCOT’s own regulations. (Clap your hands and wiggle your hips. Then continue shuffling clockwise).

4. ERCOT’s monitor announces that only $5.1 billion needs to be refunded to consumers – later revised again to $4.something billion. The rest has already been settled with large providers. The PUC Chair claims that the remaining amount is not really an error, and blames it on a formula. (Shuffle sideways to the other side of the circle, and choose a new partner).

5. The PUC Chair tells the Lt. Gov. and a Senate committee that it would be illegal to change any of ERCOT’s billings, and stands by his assertion that the overcharges were not errors. (Face the center of the circle. Turn your backsides outward, and bend forward to your waist).

6. The Texas Senate votes in record time to order that the overcharges be repaid. But the House leadership slams on the brakes and hesitates. Big business leaders urge the State not to “meddle” with prices that were previously set. That translates to “We’re happy with the winners. To hell with the losers.” (That’s all the time for dancin, folks. Now, y’all come back and see us real soon, ya hear?)

The Drama Will Shift to the Courtroom

Regardless of what the State does, this big mess is headed for months, and possibly years of litigation. The cities of San Antonio and Denton have filed lawsuits, along with multiple private utilities. The Legislature should take some action soon to clarify the whole confusing situation. Somebody besides a court judge should tell us whether the big “settled” chunk of the $16 billion was settled accurately and fairly.

Of course, they should order ERCOT to pay back the remaining overcharges. Failing that, they could ask ERCOT’s independent monitor to assist in identifying who now has the unsettled money that was collected in error. Then, the State should pass legislation to retrieve that money and place it in an escrow account. That way, the courts will know that the money is really available to award to the parties that win the various lawsuits.

Will the Public Ever Have Confidence In Such a Crazy, Convoluted System?

Probably not, unless our State leadership is willing to ensure that we are given all the facts. They also need to establish clear guidelines on how ERCOT handles electricity pricing going forward. We are just one polar vortex away from another severe winter storm. But just leaving ERCOT to continue legalized price gouging is not a workable solution. The February storm and exorbitant pricing caused extraordinary financial harm to cities, businesses and citizens throughout the state. We need a whole new electricity pricing model that better reflects the actual cost of delivering the power, with nothing more than a reasonable amount of profit.

Blog Music Special Edition – Songs for the ERCOT Shuffle:

1. “Put Your Little Foot Right There” – Lawrence Welk
2. “It’s a Cowboy Lovin’ Night” – Tanya Tucker
3. “Dance In Circles” – Tim Ryan
4. “Copper Canyon” – Lisa Kirk
5. Do-Si-Do and Face the Sides – Square dance lesson
6. “Changing Partners” – Patti Page
7. “The Winner” – Bobby Bare
8. “Born to Lose” – Ray Charles

Lt. Gov. Dan Patrick Calls for Payback of ERCOT Overcharges

By Bill Oakey – March 9, 2021

The unbelievable $16 billion in utility overcharges that followed the February storm will have to be paid back by ERCOT, and the Public Utility Commission will not be able to stop it. Lt. Gov. Dan Patrick called for the action on Monday, citing ERCOT’s own regulations requiring the paybacks to be made within 30 days (Nodal Protocol Section 6.3 (6) (a).

“Unscrambling the egg” to make it happen will no doubt require armies of lawyers and rooms full of accountants. In addition to the large block of overcharges that happened after the storm was over, Patrick cited other billing errors that came from stratospheric pricing well beyond the State’s already high approved cap. The cap was set at $9,000 per megawatt-hour. But IMM, the outside firm that monitor’s ERCOT’s operations identified sporadic charges as high as $24,000 per megawatt hour. Those errors must now also be corrected.

In the meantime, heads are rolling at all level’s at the State’s utility authorities. On Monday, a second member of the three-member Public Utility Commission resigned. Shelly Botkin’s departure was effective immediately, leaving just Chairman Arthur D’Andrea in place. Then, early Tuesday morning, the Texas Observer reported that ERCOT is refusing to turn over records related to their preparedness and their response to the winter storm. They are seeking an opinion from the State Attorney General to avoid disclosing the information. ERCOT insists that it is not subject to the State’s open records laws because it is not a State agency. The result could be a long legal dispute that ends up at the Texas Supreme Court.

Stories of astronomical electric bills from ERCOT’s demand-based pricing system and the billing errors abound. On Monday, the City of Denton filed suit against ERCOT over an electric bill for $207 million. This compares to their entire annual budget of around $230 million. On a hopeful note, there is word emerging of a huge Tesla “secret battery” that is being constructed at a site close to the ERCOT grid. If all goes well, this could become part of a much needed solution to our power generation woes.

The Legislature is currently rolling out a bucketful of bills to deal with some of the immediate problems. I will not be surprised if they have to appoint a two-year interim committee to hammer out long term reforms to fix the entire tangled up mess. The question remains as to what might happen if we get another severe winter storm before enough current power generating facilities are sufficiently weatherized and enough new ones can be brought online. In my view, the best way to protect citizens from serious danger and costly water-related repairs would be to focus on strategies to implement effective rolling blackouts.

Good News From Austin Energy!

While many Texas utilities faced devastating losses during the storm, Austin Energy estimates that it earned $54 million. That’s because our City-owned utility has done an excellent job weathering its generating facilities. The actual amount of revenue that Austin energy receives, however, could be anywhere between minus $16 million and plus $104 million. It all depends on how well ERCOT “unscrambles the egg” to reprice the State’s power purchase transactions. In any case, our utility’s ratepayers should not be saying “yikes” to massive spikes in forthcoming bills.

But…wait! You might be wondering why we had to freeze in the dark if Austin Energy weatherized most of its power plants, and they were working during the storm. That’s because our electricity goes into the ETCOT grid, where it is sold statewide through a convoluted demand-based bidding process. A process that we now know can lead to other-worldly prices, and become riddled with pricing errors.

Where Is Austin Energy’s Reward for Weatherizing Power Plants?

Under the current system, why doesn’t Austin Energy get some kind of financial reward for better management of its facilities? This is definitely an issue that our City Council and our Legislative delegation needs to look into. The reward for well-managed utilities could come in the form of discounts applied to power purchased from the grid. Or, the State could hold some revenue in reserve from power that is sold. Then, they could do an annual review and issue payments to well-managed utilities, based on a certain set of criteria.

Perhaps there is some provision buried deep within the  troves of ERCOT and PUC regulations that we just don’t know about. If not, let’s hear it for a new bill at the State Capitol to give utilities like Austin Energy and their ratepayers proper compensation-for now, and into the future.

The Great Texas Power Swindle – State Refuses to Correct $16 Billion ERCOT Billing Error

By Bill Oakey – March 8, 2021

While you and your neighbors were freezing in the dark for several days in February, you probably wondered if you could trust the “powers that be” to straighten out the big, ugly mess. Fast forward to Friday March 5. We learned that ERCOT, the team that manages the Texas power grid, kept the maximum price allowable for electricity for 32 hours past the end of the storm. So, for a day and a half, Texas electric utilities were overcharged to the tune of $16 billion. During the full period of the maximum pricing, including the overcharge period, utilities were charged $9.00 per kilowatt hour. That is 75 times the normal winter rate, according to NPR News.

How much do Texas ratepayers stand to lose in this shameful debacle?

Here’s the simple math. This is based on very rough averages, but it will give you the basic perspective:

  1. $16 billion billing error divided by 29 million residents of Texas = $552.00 for every man, woman and child in the state.
  2. $552.00 times 1 million Austin residents = $552 million lost to Austin ratepayers
  3. $552.00 times 2 million Austin metro residents = $1.1 billion lost to the Austin Metro

Surely, the Texas Public Utility Commission would order those overcharges to be paid back. Right?

WRONG!

Like Trying To Unscramble An Egg?

On Friday March 5, Mr. Arthur D’Andrea, the new PUC Chair, who just replaced the ousted former Chair, tried to explain their decision NOT to correct the overcharges. “It’s just nearly impossible to unscramble this sort of egg,” he proclaimed. Then he did an artful Texas two-step to dance around the issue. In doing so, he left a big boatload of unanswered questions:

  1. Are there procedures in place to guard against keeping prices high beyond the conclusion of a power emergency?
  2. Is there a written policy regarding if, when and how the related overcharges should be corrected? If not, why not, and will such a policy be forthcoming?
  3. Who all is responsible for monitoring the fluctuating electricity prices?
  4. What specifically were the various breakdowns in procedures that led to the February overcharges?
  5. Are there any penalties placed upon employees for actions or inactions that can lead to these types of overcharges? If not, will there be some in the future?
  6. What is the historical record of previous overcharges similar to these?
  7. What specific steps can be taken to prevent these overcharges from happening again?
  8. Do any State laws or regulations need to be revised or new ones written to authorize and mandate that these type overcharges be corrected?
  9. Does the Governor have emergency authority or any other powers to make this happen? If not, can political pressure be applied?
  10. How long has it been since ERCOT and the PUC have been audited by the State Auditor?
  11. Are there any reports showing whether or to what extent these agencies have followed previous audit recommendations?
  12. Who will be the first State leader to demand that the overcharges be paid back, ask for revised procedures for both agencies, and request new State audits.
  13. Have you ever heard of any business or agency, public or private, that has ever even suggested not correcting a $12 BILLION billing error??!!

The biggest question – Why do we have such a screwball system? A convenience store owner could face civil penalties up to $10,000 per violation for price gouging. And yet the electric power suppliers get away with it. A bunch of fat cats are now laughing all the way to the bank! For the wonks among you, here’s the scoop on how ERCOT works. This article is from April, 2019. The warning signs were flashing, as they have been for a very long time.

Humpty Dumpty – Texas Style

By Bil Oakey

Humpty Dumpty fell from a tower
That ERCOT assigned to bring us all power
None of the bureaucrats and none of their friends
Could put Humpty back together again

So they gathered his innards and tossed ’em in a bowl

And scrambled him up, unaware of the toll

Try as they may, and try as they might

Those buffoons just couldn’t get anything right

 

They overcharged Texans by $16 billion

How’s that for relief from the freeze and the chillin’?

You can’t unscramble this sort of egg

Said the PUC Chairman – was he pulling our leg?

 

The Texans I know are smart and tough

We won’t put up with that kind of guff

Charging 75 times the normal rate

Is no way to run the Lone Star State!

 

Humpty Dumpty will not be forgotten

By now the poor fellow is probably rotten

It’s time for our leaders to stand up and be counted

There’s a big hill to climb, but it must be surmounted


Anyone who reads this should contact their State Representative’s office and their State Senator to ask for an end to the insanity surrounding our electric power grid and the lack of common-sense regulations.

Check out this amazing, but unverified YouTube video on how to  unscramble an egg.

A Blast From My Past

My days of consumer activism began in the 1980’s. As a member of Austin’s Electric Utility Commission, I fought many electric rate battles. Here is one of my letters to the editor in the Austin American-Statesman. The last line became my slogan:

Isn’t it interesting how many words in the English language have more than one meaning? Take, for example the, word “bill.”  Birds have bills. The Legislature passes bills. Entertainers are listed on bills. But the worst kind of bill is the kind you have to pay, like an Austin electric bill. Well, I have a very simple message. My name is Bill, and I would like to lower yours.

Musical accompaniment for this blog piece:

1.Humpty Dumpty Heart – Hank Thompson (original 1947 version)
2. Dirty Old Egg-Sucking Dog – Johnny Cash (live from Folsom Prison)
3. Four Strong Winds – Bobby Bare
4. The Blizzard – Jim Reeves
5. Storms Never Last – Dottsy
6. I Am The Walrus – The Beatles
7. Texas Two-Step – Vance Lane
8. Take The Money and Run – Steve Miller Band