Independent directors of the struggling Texas network operator resigned on Tuesday as the financial and political fallout from last week’s electricity crisis continued to intensify.
Texas Electric Reliability Council faces calls for reform and at least two lawsuits for dealing with last week’s electricity crisis, when an arctic storm destroyed more than half of the power generation capacity of the US state and plunged millions of people into darkness.
Criticism has focused on the decision to keep wholesale electricity prices locked in at the allowable maximum of $ 9,000 per megawatt hour for most of the week – several times higher than the average price of around $ 12 per megawatt hour. MW hour – with financial consequences which are only becoming evident.
Ercot executives argued that it was necessary to attract as many generations as possible to the storm-affected grid.
But the move put enormous financial pressure on many electricity providers forced to purchase electricity at unusually high prices and was passed on to some consumers with tariff plans tied to wholesale prices, resulting in extremely high bills for some.
Ercot chairman Sally Talberg and three other 16-person board members tendered their resignations, along with another candidate who had yet to be confirmed, the network operator said in a statement. regulatory filing with the Texas Public Utilities Commission.
In a joint resignation letter, they acknowledged “the pain and suffering of Texans” and noted criticisms that some directors of Ercot were not based in the state. “To give state leaders a free hand in the future direction and to eliminate distractions, we are stepping down from the board,” they wrote.
The freewheeling electricity market in Texas has come under unprecedented pressure by the cold snap, grabbing electricity retailers, electricity providers and traders in the process.
Just Energy, a Canadian retail energy provider operating in Texas, has warned that it could suffer a loss of around $ 250 million due to high wholesale electricity prices, to the point where it could fail. not be able to continue to operate.
In a statement criticizing Ercot, Just said that “unless the Texas government takes corrective action, due to, among other things, high and sustained prices, the weather event is likely to have had a negative financial impact. substantial on the business “.
The company had credit agreements with major energy trading houses including BP, Shell, Macquarie and EDF Trading, which in turn could be affected if Just Energy were unable to pay.
Other financial losses have emerged in recent days, notably power producers who have been forced to buy electricity on the spot market at high prices to cover supply commitments.
Meanwhile, regulators and state officials are working to keep costs from falling directly on consumers who are already suffering from power outages and the lingering economic effects of the pandemic.
Some taxpayers on packages directly tied to wholesale prices have racked up thousands of dollars in utility bills in just a few days. A family in the Fort Worth area told the Financial Times they needed to get a new credit card to absorb more than $ 8,000 in charges from their retail electricity supplier Griddy.
Texas Governor Greg Abbott has welcomed the resignations. He called for Ercot’s reform and vowed to continue the state’s investigation into what was wrong.
“Ercot executives assured Texas’s electrical infrastructure was prepared for the winter storm, but those assurances turned out to be woefully false,” he said.