Over the weekend, Texas Gov. Greg Abbott held talks with some members of the state legislature to discuss the spike in energy bills affecting Texans, many of whom received the bills after enduring days of shivering inside their homes with no electricity.
“We have a responsibility to protect Texans from spikes in their energy bills that are a result of the severe winter weather and power outages," Abbott said following the meeting, which he called productive. “We are moving quickly to alleviate this problem and will continue to work collaboratively throughout this week on solutions to help Texas families and ensure they do not get stuck with skyrocketing energy bills.”
Variable-rate power plans
The consumers getting hit with huge electric bills are those who enrolled in their utility company’s variable-rate power plan. Under these plans, utility customers pay for electricity based on the wholesale cost the utility pays.
Usually, it saves them money. But during last week’s deep freeze that gripped the entire state, the wholesale costs of electricity surged. Many of the residents are getting bills for thousands of dollars. According to the New York Times, one customer got a bill for nearly $17,000.
State regulators may have also played a role. A week ago, as temperatures were plunging across the state, the Texas Public Utility Commission ordered the Electric Reliability Council of Texas (ERCOT) to alter its pricing structure, which it said was not working in these extreme conditions.
“The Commission directed the Electric Reliability Council of Texas to modify pricing models to more accurately reflect the scarcity conditions in the market,” the commission said in a statement. “Specifically, the Commission directed ERCOT to ensure that firm load being shed in ERCOT’s Energy Emergency Alert Level 3 operating condition is accounted for in ERCOT’s scarcity pricing."
Huge increase in the cost per kilowatt-hour
As a result of that order, the standard price of electricity in Texas jumped from an average of 12 cents per kilowatt-hour to $9.
Abbott said the state leaders attending the weekend teleconference agreed that the state must take steps to alleviate at least some of the burden facing Texas utility customers. Some consumer advocates, meanwhile, are targeting utility companies that marketed variable-rate plans, calling them “predatory.”
A Dallas County Judge, Clay Jenkins, took to Twitter to ask Texans affected by high energy bills to provide details, including the name of their electricity provider.