The Texas power grid operator, the Electric Reliability Council of Texas (ERCOT), made a $16 billion pricing error during the week of the winter storm that hit the state hard; which also led to power outages across the state and beyond, says Potomac Economics, which monitors the state’s market.
Firstly, as reported by Reuters, ERCOT kept prices too high for more than a day after the outages took place; late in February 17. Potomac said on a filling ERCOT should have immediately ended the prices intervention.
“In order to comply with the Commission Order, the pricing intervention that raised prices to VOLL (value of lost load) should have ended immediately at that time, late on Feb. 17,” Potomac Economics stated.
However, ERCOT kept prices at VOLL high “by inflating the Real-Time On-Line Reliability Deployment Price Adder for an additional 32 hours; through the morning of February 19.”
Consequently, ERCOT’s market faced a $16 billion inflation in prices. Potomac Economics firstly reported its findings through Bloomberg and the Texas Tribune, later reported by Reuters.
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ERCOT with more vacancies, Magness ousted
After the findings, Moody’s, the rating agency, downgraded ERCOT from an A1 to an Aa3. Also, company’s outlook got a “negative” label on Thursday.
On the other hand, on Wednesday ERCOT’s board ousted chief executive Bill Magness, adding to the executive’s vacancies for the company. As we reported previously, several company directors resigned, leaving the company with seven vacancies.
In fact, even more directors have resigned since then, the last ones doing it this Monday.
Moreover, the winter storm provoked not only an energy crisis, but left millions in the dark, with no electricity or gas supply. Around 22 people died. And neighbor countries, like Mexico, also faced supply disruptions.
Finally, in addition to Potomac’s findings; there’s the Federal Energy Regulatory Commission, FERC, investigating whether prices at that week were artificially boosted. Memories of past frauds came back to regulators after the Texas winter storm.