The fault of Texas Governor Greg Abbott is that power prices shot through the roof even as the crisis was ending. The official line from the governor's office is that Abbott had nothing to do with the decision that cost billions of dollars. Bill Magness, the former President and CEO of the Electric Reliability Council of Texas, took the stand this week in a hearing for a co-op based in Waco. During last year's historic winter storm, ERCOT made a key decision to keep electricity prices high, even after the power was restored, for more than a day after things started to return to normal. The decision cost power providers an extra $16 billion in costs and dragged it into Chapter 11. Power companies are not the only ones who got the short end of the stick. Some customers saw huge power bills after the storm. After last year's deadly storm left millions of Texans without heat for days and exposed enormous underlying problems with the state's electric grid, ERCOT cleaned house. Magness defended ERCOT's decision to cut power for some customers during the cold snap, even though some of the organization's officials went gracefully. The testimony of Magness on Wednesday sheds new light on how those fated days may have gone down. During the final days of the storm, power prices were capped at more than 150 times normal. The decision to keep those rates was made by the governor, according to Magness. He testified that the former Public Utility Commission Chairwoman told him that if we emerged from the rotating outages it was imperative that they not resume. We had to do what was necessary to make it happen.
Magness said that the decision to keep prices high in the last days of the crisis was to encourage power plants to come back online and to keep big power users offline in order to conserve emergency power reserves. The move to keep prices high for so long and the enormous cost to the system has been criticized by watchdogs as ill-advised and exceeds the scope of the Commission's power. Bank of America, Morgan Stanley, and Goldman Sachs profited from the inflated prices, and were caught on a recorded call with a former Public Utility Commission employee who assured them he was working to help them keep their profits.
An aide from Abbott's office was at ERCOT headquarters when the decision was made, but the governor's office had nothing to do with it.
Governor Abbott told everyone involved that they needed to do what was necessary to keep the power on and prevent the loss of life, according to the Houston Chronicle.
Beto O'Rourke, the Democratic candidate for governor of Texas, has been campaigning against the failures of the government. O'Rourke blasted Abbott's involvement in the decision. We wouldn't be surprised if Abbott fudged the truth when it came to wind energy and the grid.
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