Ex-ERCOT chief testifies that Gov. Abbott’s order led to energy price hike during storm: report

Price hike led to billions of dollars in profits for power generators

Bill Magness, President and CEO of the Electric Reliability Council of Texas (ERCOT), testifies as the Committees on State Affairs and Energy Resources hold a joint public hearing to consider the factors that led to statewide electrical blackouts, Thursday, Feb. 25, 2021, in Austin, Texas. The hearings were the first in Texas since a blackout that was one of the worst in U.S. history, leaving more than 4 million customers without power and heat in subfreezing temperatures. (AP Photo/Eric Gay) (Eric Gay, Copyright 2021 The Associated Press. All rights reserved.)

While testifying in a bankruptcy trial for a Texas electric co-op, the state’s former grid manager said Gov. Greg Abbott’s directive led them to keep power price points high during last year’s winter storm, according to a Houston Chronicle report.

Though power plants were beginning to recover in the aftermath of Winter Storm Uri, then-Public Utility Commission Chair DeAnn Walker told ex-ERCOT CEO Bill Magness that Abbott “wanted them to do whatever necessary to prevent further rotating blackouts,” he testified, according to the report.

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That led ERCOT to keep energy prices at the maximum of $9,000 per megawatt hour, resulting in billions of dollars in profit for power generators in the market.

The windfall came at the expense of local utilities, which have taken on millions in debt. That includes San Antonio’s CPS Energy, which filed several lawsuits alleging price gouging after the storm.

Magness still defended the decision, according to the report, saying that the power grid was still vulnerable around that time, and that some power generators that came back online were still going offline intermittently.

Abbott denied any responsibility for the decision to keep energy prices high.

“As Texans would expect, Governor Abbott instructed everyone involved that they must do what was needed to keep the power on and to prevent the loss of life,” Abbott’s spokesperson told the Houston Chronicle in an email Wednesday. “This is the same instruction Governor Abbott gave to the PUC and ERCOT (during a cold snap) earlier this year: Do what needs to be done to keep the power on.”

The energy price hike is a central part of the bankruptcy trial of Brazos Electric. Attorneys for the co-op argued that the price hike was reckless and led to a massive $1.9 billion power bill that caused the company to seek bankruptcy.

The testimony may affect Abbott’s political standing ahead of the 2022 elections.

Beto O’Rourke, who is running for the Democratic nomination for governor, seized on the news Wednesday.

“Abbott screwed us, and he’ll continue to screw us until we vote him out,” O’Rourke said on Twitter.

O’Rourke has also previously pointed out how energy executives who have profited off the winter storm have donated millions to Abbott’s campaign.

That includes energy tycoon and former Abbott appointee Kelcy Warren, whose company Energy Transfer Partners pulled $2.4 billion in profits from the sky-high prices. Warren wrote Abbott a $1 million check four months after the deadly storm.

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