“This is the right thing to do and it is one step we can take now to begin to fix what went wrong”
AUSTIN – Lt. Gov. Dan Patrick called on the Texas Public Utilities Commission (PUC) and the Electric Reliability Council of Texas (ERCOT) to correct the emergency pricing error that continued after the power shortage had ended and the major threat to the Texas grid had passed.
“We are continuing to investigate the power outages of the February 15 arctic blast which plunged millions of Texans into darkness.
“In response to grid-wide power shortages starting February 15, the PUC ordered ERCOT to institute the $9,000 per megawatt hour cost cap, which is designed to encourage increased power generation during an extreme shortage. However, according to the Independent Market Monitor (IMM), ERCOT incorrectly extended that pricing intervention after the power shortage had ended. The $9,000 price should have ended at 11:55 PM on February 17. Instead, it continued throughout the entire day of February 18 into February 19th – 32 hours total – which resulted in an additional $16 billion in charges.
“The IMM is Potomac Economics, an independent economics and engineering firm that has served as ERCOT’s market monitor for the past 16 years. It is their job to identify mistakes and recommend action. We have learned they contacted ERCOT on Thursday, February 18, to inform them their pricing was incorrect, but ERCOT ignored their recommendation.
“The IMM identified a second significant error that also must be corrected immediately. ERCOT failed to cap ancillary service prices at $9,000 which resulted in prices rising as high as $24,000 a megawatt hour at intervals during the storm. Pricing should never have exceeded the $9,000 cap at any time.
“The IMM has recommended that the PUC exercise their authority to direct ERCOT to correct both these pricing errors, but they have declined to do so. ERCOT has a procedure for correcting pricing errors, but has also declined to act so far.
“According to the ERCOT Nodal Protocol Section 6.3 (6) (a), ERCOT has 30 days from the event to correct errors in pricing. Today I am calling on both the PUC and ERCOT to follow the recommendations of the IMM and correct these mistakes. Correcting this $16 billion error will require an adjustment, but it is the right thing to do. It will ultimately benefit consumers and is one important step we can take now to begin to fix what went wrong in the storm.”