State Lowers Price Cap For Power Providers

The state’s Public Utility Commission last week lowered the maximum allowable wholesale price for electricity by almost half, from $9,000 per megawatt hour to $5,000.

The move came after prices soared to the maximum during last February’s deadly freeze, causing financial havoc along with the widespread power outages. A number of electric providers declared bankruptcy after being faced with enormous bills, including Brazos Electric Power Cooperative and Griddy Energy.

As the Austin American-Statesman reported, the state’s largely deregulated electricity market provides financial incentives to prompt power generators to deliver more electricity to the grid during peak demand. But those incentives came with steep prices, and some Griddy customers received electric bills of nearly $10,000. Those bills were ultimately forgiven under an agreement negotiated by the attorney general’s office.

Peter Lake, chairman of the PUC, said lowering the price ceiling will “make sure the people of Texas are not exposed to those extraordinary high prices” again, the Statesman reported.

However, the CEO of the state’s largest power generator worries the state has not done enough to insulate itself against another deadly freeze. Curt Morgan of Vistra Corp. said that while his company has spent $50 million this year weatherizing more than a dozen plants, the state still hasn’t ensured a reliable supply of natural gas. The Texas Railroad Commission, which regulates the natural gas industry, is still working to finalize rules that would set weatherization mandates. However, those rules would not go into effect until early 2023, the Texas Tribune reported.

Morgan told legislators that Vistra’s plants couldn’t get enough natural gas to run anywhere near full capacity during the freeze.

“Why couldn’t we get it?” Morgan said. “Because the gas system was not weatherized. And so we had natural gas producers that weren’t producing.”

State to get $35 billion in infrastructure funds

In the next five years Texas will get more than $35 billion in federal funding for roads, public transportation and water system improvements, The Dallas Morning News reported. The funding is part of the massive infrastructure bill Congress passed in November to provide $548 billion in new investments across the country over five years.

The state’s road system got a “D+” in a 2021 report card from the American Society of Civil Engineers.

“Current funding levels and resources from the state’s gas tax are inadequate to keep up with Texas’ projected growth, leaving a $15 billion annual gap through 2040,” the engineering report said.

The federal funding also includes $1.2 billion for Texas airports, $537 million to replace and repair bridges and at least $100 million for broadband expansion, according to The Morning News.