Court finds Texas was right to max out electricity prices

Source: By Jason Plautz, E&E News • Posted: Monday, June 17, 2024

The state Supreme Court rejected a claim that regulators overstepped during the Winter Storm Uri energy emergency.

An Oncor Electric Delivery crew works on repairs in Texas in February 2021.

An Oncor Electric Delivery crew works on repairs in Texas in February 2021. Eli Hartman/Odessa American via AP, File

The Texas Supreme Court ruled Friday that state regulators were correct to raise the price of electricity to its maximum level during a 2021 winter storm, rejecting a challenge from a power generator that said it lost more than a billion dollars in the freeze.

The 7-0 decision reversed a ruling from a lower court issued in March 2023 and follows years of debate over whether the state should have to set wholesale electricity prices at their maximum level to avoid a total grid collapse.

During Winter Storm Uri in February 2021, multiple forms of power generation went down amid freezing temperatures and supply shortages, leading to widespread power failures. An emergency order from the Texas Public Utility Commission and backed by the Electric Reliability Council of Texas (ERCOT), the state’s main grid operator, lifted electricity prices to the cap of $9,000 per megawatt hour.

Because Texas operates an “energy only” market, electricity is priced fluidly and changes with demand to encourage generators to either ramp up or limit generation and avoid overloading the grid. During the storm, the PUC ordered load shedding, or rolling blackouts, to balance grid frequency, but also decided to raise the price of electricity in order to incentivize the most possible generation.