Texas Energy Chief: “Following Orders” in Jacking Prices During Blackout

February 24, 2022

Houston Chronicle:

The former head of the Texas power grid testified in court Wednesday that when he ordered power prices to stay at the maximum price cap for days on end during last year’s frigid winter storm and blackout, running up billions of dollars in bills for power companies, he was following the direction of Governor Greg Abbott.

Bill Magness, the former CEO of the Electric Reliabilty Council of Texas, said even as power plants were starting come back online former Public Utility Commission Chairman DeAnn Walker had told him that Abbott wanted them to do whatever necessary to prevent further rotating blackouts that left millions of Texans without power.

“She told me the governor had conveyed to her if we emerged from rotating outages it was imperative they not resume,” Magness testified. “We needed to do what we needed to do to make it happen.”

Last year the governor’s spokesman, Mark Miner said the governor was not “involved in any way” in the decision to keep prices at the maximum of $9,000 per megawatt hour – more than 150 times normal prices. He described a decision to send an aide to ERCOT’s operations center in the middle of the crisis as based on the feeling the grid operator was spewing “disinformation.” 

“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.  This is the same instruction Governor Abbott gave to the PUC and ERCOT earlier this year: do what needs to be done to keep the power on,” Miner said in an email Wednesday afternoon.

The decision to keep power prices at the maximum cap is now at the center of a bankruptcy trial waged by the Waco-based electric co-op Brazos Electric. 

Brazos contends that decision was made recklessly, adding up to a $1.9 billion power bill from ERCOT that forced them into bankruptcy.

“It did nothing at all to cause more generation to come online,” said Lino Mendiola, one of the attorneys representing Brazos. “It was an attempted remedy that didn’t solve any of the problems caused by the winter storm.”

The original order to raise power prices to the cap was made by the Public Utility Commission on Feb. 15, to try to get power plants back online and encourage large power users like factories and petrochemical plants to stay offline. ERCOT elected to keep prices at the cap until Feb. 19, a decision thatthe Texas Independent Market Monitor criticized in a report last year as having, “exceeded the mandate of the Commission.”

“This decision resulted in $16 billion in additional costs to ERCOT’s market,” wrote Carrie Bivens, director of ERCOT’s Independent Market Monitor.

Now Abbott is facing questions about his own culpability in the handling of last year’s blackout. Democratic gubernatorial candidate Beto O’Rourke released a statement Wednesday claiming Abbott had, “once again put the profits of his donors over the people of this state.”

“Abbott screwed us, and he’ll continue to screw us until we vote him out,” he said.

Magness, who was fired last year, has long defended his and other ERCOT officials actions as necessary to keep the grid from slipping into a total blackout that could take weeks or months to recover from.

But in testimony in federal bankruptcy court in Houston Tuesday and Wednesday, he explained in detail how Walker had come to ERCOT’s operations center in the middle of the crisis and relayed to him Abbott’s demand that rotating blackouts come to an end.

Magness said he agreed that was still a risk, explaining even as power plants were starting to come back online on February 17, the system was far from secure. Some power plants were still coming offline because of cold or gas supply issues, and there was concern if power prices were allowed to return to normal market conditions, large power users might start coming back online and using crucial power reserves.

“We were still seeing 40,000 megawatts of outages. At the peak we had 52,000 megawatts but 40,000 is still a lot,” Magness said.  “We saw the potential for load shed coming again.”

And he described how after so many hours of power outages, there was risk that Texas’s problems could cascade, explaining how water plants that had been relying on backup generation would have soon run out of fuel if rotating blackouts resumed.

“And I don’t know what else,” he said.

The judge overseeing the trial, U.S. Bankruptcy Judge David Jones, responded, “You’re looking into the unknown.”

“I don’t think anyone would say you were not trying to do the right thing,” he said.

2 Responses to “Texas Energy Chief: “Following Orders” in Jacking Prices During Blackout”

  1. Peter Scheffler Says:

    Clearly he preferred a market-based solution to issuing mandates to keep the large power users off-line. Fits with not issuing mask and vaccination mandates, I suppose.

  2. rhymeswithgoalie Says:

    …and there was concern if power prices were allowed to return to normal market conditions, large power users might start coming back online and using crucial power reserves.

    The big industrial power users could have been told to suck it up and defer re-starting without killing or bankrupting any Texas citizens. That was probably a non-starter for a governor that automatically defers to bidniz over people.

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