AUSTIN, Texas — The Texas Supreme Court said the Public Utility Commission (PUC) was within its right to adjust electricity pricing during the deadly 2021 winter storm.
Attorneys for Luminant Energy argued the PUC overstepped its authority by directing the Electric Reliability Council of Texas (ERCOT) to set prices to the maximum allowed at the time. Power plants then sold electricity for $9,000 per megawatt for 32 hours.
Friday's decision rejected the challenge from Luminant Energy, stating that the PUC did not violate Chapter 39 of the Public Utility Regulatory Act, which calls for the use of competitive pricing.
After mandatory blackouts failed to get the state's power grid under control, the PUC determined its pricing formula was sending mixed signals about the state's urgent need for more power. The PUC then directed ERCOT to set wholesale electricity prices at the maximum allowable level of $9,000 per megawatt hour.
Millions lost power and hundreds died as temperatures stayed in the single digits for days. A report from the Independent Market Monitor showed the price hikes cost ratepayers in Texas $16 billion. Some power companies went bankrupt.
“It jammed prices to the max. It's set them there. And this argument that somehow that was necessary to preserve competition, that argument basically distills to an argument that we had to kill competition to save competition,” Allyson N. Ho, a partner with Gibson, Dunn & Crutcher, said in court.
After the storm, Texas lawmakers passed a securitization bill that provided a loan for power companies to repay that storm debt. Power companies pass the burden onto everyone who pays an electric bill.
