Did PUC ‘Wreak Havoc’ on Texas’ Power System?

On Wednesday, lawyers representing several large energy companies sparred in a Texas appeals court against the Texas Public Utility Commission due to the “invalid and ineffective” emergency rules that were put into effect during February’s 2021 winter storm.

According to lawyers for Dallas-based Luminant Energy, PUC illegally adopted two pricing rules that allowed the Electric Reliability Council of Texas to increase the emergency price of electricity by 650 percent for five days. 

On Feb. 15, PUC set an emergency rule that addressed the gap between supply and demand by resetting the maximum price at $9,000 per megawatt-hour – up from $1,200 at which power was trading at the moment. And it made the $9,000 price retroactive to Feb. 14, as reported by The Houston Chronicle.

Shortly after, on Feb. 16, the PUC rescinded the retroactive part of its order.
 
PUC’s actions “wreaked havoc” on the power system, forcing some retail electric providers to pay billions of dollars to provide power to their residential and commercial customers. But other electric companies actually profited from the havoc by selling their power at higher rates. 

PUC argues that the energy companies are simply upset about losing money during the winter storm, and are unjustly asking the judges to “second-guess” decisions made by them and ERCOT under severe weather conditions.

Meanwhile, Allyson Ho, a lawyer for Luminant and partner at Gibson, Dunn & Crutcher, told the Austin appellate judges that both emergency pricing rules were invalid mainly because PUC failed to file the rule change with the Secretary of State.

“This is a case where the agency disregarded legal procedures. It did not follow the law,” Ho argued Wednesday. “It is not too much to ask the PUC to follow the rules, follow the law.”

But PUC argues they didn’t violate Texas law because their actions were “a direction to ERCOT, not rulemaking.”

Texas Assistant Solicitor General Lisa Bennett argued the law “provides wide discretion” for the PUC to make such decisions.

In the end, if PUC’s actions were illegal or if it’s all just a temper tantrum from energy companies who don’t want to pay will be decided by the Court of Appeals in Austin and will dramatically affect the efforts of more than a dozen electric providers challenging their ERCOT invoices.