Ex-ERCOT chief says Abbott directed freeze blackouts to stop before decision to run up billions in bills

Source: By James Osborne, Houston Chronicle • Posted: Thursday, February 24, 2022

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Bill Magness, President and CEO of the Electric Reliability Council of Texas (ERCOT), testifies as the Committees on State Affairs and Energy Resources hold a joint public hearing to consider the factors that led to statewide electrical blackouts, Thursday, Feb. 25, 2021, in Austin, Texas. The hearings were the first in Texas since a blackout that was one of the worst in U.S. history, leaving more than 4 million customers without power and heat in subfreezing temperatures. (AP Photo/Eric Gay)

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

Bill Magness, the former CEO of the Electric Reliability Council of Texas, said even as power plants were starting to come back online, former Public Utility Commission Chair DeAnn Walker 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.”

RELATED: Brazos bankruptcy case set to open, with $1.9 billion in unpaid power bills at stake

Last year the governor’s spokesman, Mark Miner, said Abbott was not “involved in any way” in the decision to keep wholesale electricity 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,” Miner said in an email Wednesday. “This is the same instruction Governor Abbott gave to the PUC and ERCOT (during a cold snap) earlier this year: Do what needs to be done to keep the power on.”

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 co-op into bankruptcy.

Kevin Morazan warms his hands after lightning his charcoal grill to cook after losing power in the Greenspoint area due to rolling blackouts following an overnight snowfall Monday, Feb. 15, 2021 in Houston. Temperatures plunged into the teens Monday with light snow and freezing rain. The stove in his apartment is electric.
People gather at a warming shelter set up at Gallery Furniture Tuesday, Feb. 16, 2021 in Houston. As emperatures stayed below freezing Tuesday, and many in the neighborhood around the furniture store without power, Jim "Mattress Mack" McIngvale opened his store to help area residents come in from the cold.
Houston Police officers Kenneth Bigger, center, and Aaron Day, center-right, hand out blankets to people as a winter storm continues to hit the area Tuesday, Feb. 16, 2021, under the elevated portion of I-45 in downtown Houston.
Victor Hernandez, left, and Luis Martinez fill their water containers with a hose from a spigot in Haden Park, Thursday, Feb. 18, 2021 in Houston. Texas officials have ordered 7 million people to boil tap water before drinking it following days of record low temperatures that damaged infrastructure and froze pipes.

(Photos by Houston Chronicle staff photographers)

“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. The aim was to provide incentives to get power plants back online and encourage large power users such as factories and petrochemical plants to stay offline. Even as power plants were starting to come back online on Feb. 17, ERCOT elected to keep prices at the cap another 32 hours, a decision that the 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 responsibility in the handling of last year’s blackout. Democratic gubernatorial candidate Beto O’Rourke has made the crisis, which contributed to the deaths of some 200 people, a focal point of his campaign to unseat Abbott in this November’s election, recently touring Texas on a “keeping the lights on” road trip.

O’Rourke released a statement Wednesday about Magness’s testimony, 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,” O’Rourke said.

Brutal hours, stress

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

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.

RELATED: All-night ERCOT meeting raises questions about Abbott’s role in power pricing debacle

Magness said he agreed that continued blackouts were still a risk, explaining that the system was far from secure even as power plants started to come back online on February 17. Some generators were still going offline because of cold or natural gas supply issues, and ERCOT officials feared that large power users might resume operations and consume crucial power reserves if wholesale electricity prices returned to normal market conditions,

“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.”

In a diary he kept around the time of the blackout, which was submitted into evidence by ERCOT’s attorney Tuesday, Magness described how he and Walker made the decision to keep prices at the cap on the night of Feb. 17 and then waking up the next morning to tell other officials, including, Ryland Ramos, one of Abbott’s top advisors, what they were doing.

“(The independent market monitor) expressed concerns about the market,” he wrote. “DeAnn (Walker) said she understood concerns about economic efficiency, but this was about human life.”

There was no mention of an objection from Ramos or other representatives from the governor’s office.

In that same diary Magness also  described the political blowback he and other ERCOT staff endured during the days- long crisis. After noting that he had arrived back at his hotel near the operations center at 1:30 a.m. on Feb. 17, he described how the right wing radio host Alex Jones had hung a sign on the door of ERCOT’s offices in Austin about a protest against “Globalist Criminals” and how in a radio interview Abbott had, “tore into ERCOT and me personally.”

‘Looking into the unknown”

At one point during his testimony Wednesday, Magness described how problems were at risk of cascading if outages resumed, explaining that water plants relying on backup generation would have soon run out of fuel.

“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.


Blinda Whaley pours water into a pan to boil after receiving a case of water and some food from a volunteer group led by Marcel McClinton in the 1900 block of Benson Thursday, Feb. 25, 2021 in Houston. Residents in the Fifth Ward neighborhood received several cases of water and food to help with recovery from the recent winter storms. The residents of the neighborhood have been without water for several days because of broken pipes from the freeze.
Hannah Siqueiros, clears insulation from a damaged ceiling after a broken pipe was repaired pipe above the kitchen in Michelle Toy's home Wednesday, Feb. 17, 2021 in Spring. Water from a damaged pipe above the kitchen caused the ceiling to collapse.

(Photos by Houston Chronicle staff photographers)