The electricity shortages actually started in the natural gas market. And during the storm itself, the two state agencies most responsible for our energy infrastructure fumbled badly, exacerbating the cataclysm. Over the past twenty years, the state has taken a largely hands-off approach to the electricity market, opting, for example, not to require measures that are standard in other states that were hit by the same February storm but avoided the disaster. Meanwhile, it’s clear that the government will have to do more to avoid a repeat of the crisis. “Texas may be back to just a few players, and those retailers that survive will likely be owned by generators-essentially reassembling two key pieces of the old regulated market,” said Josh Pesikoff, president and CEO of Infuse Energy, a retail electricity provider in Houston. Some reports put the number of potential defaults by retail providers, municipal utilities, and cooperatives at almost two dozen. Brazos Electric Power Cooperative, one of the state’s largest co-ops, filed for Chapter 11 bankruptcy on Monday, citing a $1.8 billion bill from ERCOT.Ī year from now, it’s almost certain that Texans will have fewer electricity providers to choose from, and those that remain are more likely to be owed by companies with deep pockets, such as generators NRG (based in Houston), Vistra (based in Irving), and Chicago-based Exelon (which owns Maryland-based Constellation, which in turn owns Houston-based StarTex).
And many of those providers may be forced out of business entirely as the costs of the outages ripple through the market. However, they may be forced to find new providers or accept more expensive contracts when they renew. In competitive markets like Dallas and Houston, where customers can pick their electricity provider, most have fixed-rate contracts, which will mute the immediate impact. While national headlines have focused on residential consumers stuck with five-figure electricity bills, those horror stories are limited to a single provider, Griddy. Money is running tight all across the system, raising the prospect that much of the cost for the lack of winter storm preparation will ultimately fall to consumers. One week after the storms, the state’s grid operator, the Electric Reliability Council of Texas, which collects payments from retailers and makes sure they get to the proper electricity sellers, was short about $1.3 billion in payments, stoking concerns about the liquidity of the power market and the possibility that many retail electricity providers will file for bankruptcy. The blackout also resulted in a horrendous death toll: at least forty, a number that is expected to rise and could surpass the roughly one hundred who died in Harvey.īut the financial reckoning is only getting started. “I’m concerned about increasing power prices, job losses across the industry, and the long-term implications for the market and consumers, who have already suffered through a horrendous ordeal.”įactoring in property damage from burst pipes and lost output from factories and businesses, the storm could be the costliest in Texas history, exceeding the $125 billion financial fallout from Hurricane Harvey. “For Texans, the situation could go from bad to worse,” said Marcie Zlotnik, former chairman of Houston-based StarTex Power, an electricity retailer. As Texans begin to thaw out from the mid-February freeze that led to widespread outages across the state and left more than four million homes without power, the long-term costs of the electricity crisis are just beginning to come into focus.
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