Arthur D’Andrea, Texas’ last remaining utility regulator, resigned Tuesday night at Gov. Greg Abbott’s request, 13 days after he was appointed chairman of the Public Utility Commission.

D’Andrea submitted his resignation shortly after Texas Monthly published an article based on a recording of a March 9 phone conversation between the commissioner and financial investors.

In the call, which was closed to the public and media and coordinated by BofA Securities, D’Andrea discussed whether the PUC would reprice what was then $16 billion of market transactions. He also talked about his efforts to give the market “some calming force.”

“We knew at the time we were making a bit of a financial mess, and now we’re doing our best to clean it up,” he said at the beginning of the call.

During a March 5 PUC open meeting, D’Andrea and Commissioner Shelly Botkin had declined to reprice the market as ERCOT’s Independent Market Monitor recommended. The Monitor said the grid operator’s decision to extend $9,000/MWh scarcity pricing Feb. 18-19, after the grid had stabilized following a near-collapse, was a billing error. (See Texas PUC Won’t Reprice $16B Error.)

Botkin resigned on March 8 following that meeting.

“It’s become a political issue here in the state,” D’Andrea said on the recording. “There are some very important people who do not want to reprice, full stop. There are also some very important people who want to reprice. We are still sorting that out. The best I can do is put the weight of the commission in favor of not repricing.”

D’Andrea apologized for the “instability” and then said the “good news” is that the repricing issue can’t last past this week, a reference to ERCOT’s 30-day internal deadline to correct market prices.

The PUC told the magazine that the call was part of regularly scheduled discussions between commissioners and investors and that it had been rescheduled by the February storm. D’Andrea did not share confidential information or say anything he hasn’t already said in public, the commission said.

Abbott, who appointed D’Andrea chairman on March 3 shortly after DeAnn Walker’s resignation, said he will name a replacement “in the coming days” who will chart “a new and fresh course for the agency.” D’Andrea’s resignation is effective immediately upon a successor’s appointment.

“Texans deserve to have trust and confidence in the Public Utility Commission, and this action is one of many steps that will be taken to achieve that goal,” Abbott said.

The governor had defended D’Andrea on March 12 against Lt. Gov. Dan Patrick’s call for his resignation over his refusal to reprice the market transactions, which the IMM has since reduced to $4.2 billion, in addition to $900 million in incorrectly awarded ancillary services. (See Abbott Rejects Call to Fire D’Andrea.)

D’Andrea said he was in a very comfortable position as a commission of one.

“I went from being on a very hot seat to having one of the safest jobs in Texas. I think it’s just going to be me for a while,” he said on the tape, expressing his belief that Abbott would wait until after the legislative session ends May 31 to appoint new commissioners.

“I think they probably enjoy having just one person up there because they can secure promises from me and I can’t just say, ‘Oh, well, my fellow commissioners wouldn’t go along.’ It’s easier for everyone, actually, much as I miss my colleagues. At a time like this, when I’m communicating all the time with the legislature, it’s easier to just be going through one person.”

Abbott appointed D’Andrea to the commission in 2017.

The PUC’s open meeting scheduled for Thursday has been canceled.

D’Andrea, Bivens Stick to Their Positions

Earlier Tuesday, D’Andrea spent about 10 minutes before the Texas House’s State Affairs Committee. He reiterated his opposition to retroactively repricing the market, saying market rules explicitly allow price corrections only in the case of an input error or system malfunction.

“The rules are pretty clear it’s got to be ERCOT fat-fingering, and that’s not what happened here,” D’Andrea told the panel. “The people who thought they were going to win but are now going to lose, they are going to sue. We will have lost for a second time, and we’ll still have this mess.”

IMM Director Carrie Bivens also testified before the committee, standing by her position that the Monitor made the right call in saying ERCOT made a “pricing error” in extending the $9,000/MWh scarcity prices for 32 hours after the grid had stabilized.

“I don’t want to act as if it’s an easy decision. On [Feb. 18], it was easy to say this isn’t how we think things should be priced,” she said. “It still seems a clear choice now, standing here in late March. It’s more complex because the derivatives market has been settled based on this market. We recognize there are large costs on both sides of making this change. We still fall on the side that it’s the best thing to do, but we want to acknowledge there are good arguments, and reasonable people can disagree.”

Bivens stuck to her guns under further questioning by committee Chair Chris Paddie (R), who posited that ERCOT’s decision to extend scarcity pricing, at a time when load was no longer being shed and reserve supplies were beginning to accumulate, was made for reliability purposes.

“I absolutely understand that they had a reliability goal, that they were trying to accomplish that with this pricing intervention,” Bivens said, arguing ERCOT’s decision wasn’t in compliance with the PUC’s emergency order that put the scarcity prices in place.

“It was at odds with an efficient market, supplementing judgment with the normal supply and demand and making that order last longer than it should have lasted,” she said.

Paddie asked about generators that did everything right by winterizing and hedging their positions. “Is it possible someone will now be asked to give us money out of their pocket and give it to someone who didn’t do things as well?”

“That money should not have been put in their pocket in the first place,” Bivens responded.

Rep. Richard Peña Raymond (D) expressed frustration with the $46 billion in market transactions that occurred during the winter storm, almost five times ERCOT’s normal annual market activity. Repricing $16 billion of transactions still left $30 billion to energy providers.

“We’re not even disputing the $30 billion. We’re saying, ‘Hey, the $30 billion, you’re going to get that,’” Raymond said, his voice rising. “Little folks get hit all the time. They’re going to get hit with a $30 billion bill, and we’re not talking about doing anything about that at all.”

Asked by Rep. Todd Hunter (R) who would benefit from repricing the market, Bivens said she is a wholesale market expert, not a retail market expert.

“Time will tell,” she said. “We don’t know how those dollars will end up.”

ICE: Repricing ‘Detrimental’ to Texas

Chris Edmonds, global head of clearing and risk at Intercontinental Exchange (ICE), gave the Texas House some ammunition in its battle with the Senate over whether to reprice the market.

Testifying before the State Affairs Committee on Tuesday, Edmonds said statements that ICE would reprice its ERCOT market derivatives if the grid operator did the same are “simply inaccurate.”

“The events around [the storm] are not clerical errors or billing mistakes or market mistakes,” he told the committee in his opening remarks. “The market reacted exactly as expected. Retroactively modifying the prices is not the way to resolve the issue from February … and will lead to far great macroeconomic pain for a larger group of Texans and market participants.”

Edmonds said repricing the market would “erode” confidence in “future markets related to Texas” and “produce detrimental consequences for economic activity within the state.

“Any such decision through this political process will forever define the ‘open for business’ culture that Texas has worked diligently for decades to create,” he said.

The Senate on Monday proposed legislation that would require the PUC to order ERCOT to reprice the market transactions in question by March 20. Patrick, who presides over the Senate, then asked the House to follow suit. (See Texas Senate Passes Bill to Reprice ERCOT Feb. Sales.)

However, the House has focused on reforms to protect consumers, restructure ERCOT, securitize distressed utilities, build infrastructure and improve the energy market’s resilience.

“Testimony today demonstrated the complexity of the financial elements of resettlement,” House Speaker Dade Phelan said in a tweet. “Repricing based on disagreement with PUC and ERCOT’s management decisions is an extraordinary government intervention in the free market.”