CPS Energy sues ERCOT over exorbitant energy prices during Texas winter storm

Lawsuit applauded by San Antonio mayor

SAN ANTONIO – CPS Energy on Friday sued the Electric Reliability Council of Texas after an independent monitor for the Public Utility Commission reported the grid managers overcharged power companies during the winter storm.

“We are fighting to protect our customers from the financial impacts of the systemic failure of the ERCOT market and the outrageous and unlawful costs associated with that failure,” said Paula Gold-Williams, President & CEO of CPS Energy. “During a state-declared disaster, ERCOT ran up $20 billion in charges for 5 days of energy supply due to its lack of oversight, preparedness, and failure to follow its own protocols. That is a huge amount of money and it’s incredibly important we continue to fight for our customers to bring those bills down.”

Potomac Economics, the watchdog group that monitors ERCOT’s actions, reported that power companies were overcharged by up to $16 billion. In a letter filed Thursday, the group called on ERCOT to issue a $4.2 billion price correction, according to the Texas Tribune.

The Public Utility Commission has refused to retroactively reduce the market prices, saying that it warrants further investigation.

In the lawsuit, CPS Energy accused ERCOT of not paying what it owes to the San Antonio utility.

“ERCOT has short paid approximately $2.5 billion to the market participants, and at least $18 million is owed to CPS Energy for the Winter Storm Event,” according to the court filing.

The legal action was applauded by San Antonio Mayor Ron Nirenberg.

“CPS Energy is taking this action to defend its customers. Those who suffered the consequences of ERCOT’s failure must not be victimized by one of the largest illegal transfers of wealth in the history of Texas, too,” Nirenberg said. “Ensuring the fair treatment of customers and preventing them from additional harm by outrageous, excessive charges is essential, and we are fighting to achieve that goal.”

Gold-Williams said during the press conference Friday that the utility was forced to spend hundreds of millions of dollars in incremental costs to buy power and natural gas during a five-day period coinciding with the storm.

She said the total figure had dropped below $1 billion, an amount used by her and other CPS officials in recent weeks, since $140 million in natural gas purchased by CPS during the storm was not delivered to the utility.

Gold-Williams could not provide information on how much natural gas CPS purchased in the days before the storm, specifically Feb. 9-11, when some forecasters had already predicted the extreme cold could impact energy infrastructure.

Price charts for the natural gas spot market show natural gas increased nearly two-fold Feb. 11, before spiking Feb. 17.

After this reporter told Gold-Williams KSAT had been asking how much natural gas the utility purchased by specific day, Gold-Williams replied, “I don’t know who you are, sir.”

A CPS spokeswoman said Friday afternoon she was working on getting the specific figures, which should show if the utility took steps to reduce its exposure to increasing prices.

The lawsuit filed by CPS claims ERCOT is responsible for massive overcharges because it failed to come down from its system-wide offer cap of $9,000 per megawatt-hour (MWh), forcing power companies to pay sky-high rates day after day even after energy scarcity had evaporated.

ERCOT’s CEO, Bill Magness, said energy prices were not erroneously high, but “an intentional and carefully considered decision to protect human health and safety while stabilizing the electric grid,” according to the Tribune.

Magness was fired in the aftermath of the winter storm.

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About the Authors:

Emmy-award winning reporter Dillon Collier joined KSAT Investigates in September 2016. Dillon's investigative stories air weeknights on the Nightbeat and on the Six O'Clock News. Dillon is a two-time Houston Press Club Journalist of the Year and a Texas Associated Press Broadcasters Reporter of the Year.