The Texas Supreme Court has agreed to review a lower court’s invalidation of the Public Utility Commission’s emergency pricing orders during the deadly 2021 winter storm, potentially placing billions of dollars of transactions at stake.
The state’s high court granted the PUC’s petition for review Friday and set oral arguments for Jan. 30, 2024 (23-0231).
The commission in March asked the court to review the decision, reverse the judgment and either dismiss the case or rule in the PUC’s favor. It said the orders it issued expired years ago and therefore cannot be voided, and said the commissioners made “split-second decisions” necessary to help correct a market failure. (See Texas PUC Appeals Court’s Decision on Uri Transactions.)
The PUC filed its petition shortly after the 3rd Court of Appeals reversed two commission orders to keep the market’s wholesale prices at the $9,000/MWh cap during Winter Storm Uri. The court found the commission’s actions “entirely” eliminated competition and were contrary to state law. It remanded the case for “further proceedings consistent” with its ruling.
The actions resulted in $16 billion of market transactions that ERCOT’s Independent Market Monitor said were incorrectly priced during the 33 hours that followed once the grid operator stopped shedding firm load. The PUC declined to re-price the transactions. (See “Monitor: $16B ERCOT Overcharge,” ERCOT Board Cuts Ties with Magness.)
Some of the $16 billion balance has since been securitized and some participants have been paying off debts they now might not even owe. Other transactions have been settled outside ERCOT and can’t be undone, according to legal expertise.
Luminant Energy, Vistra’s generating subsidiary, filed the appeal with the 3rd Court and has been joined by Exelon. They say the commission exceeded its authority in allowing the high prices while the ERCOT grid was trying to find generation after more than 50 GW of resources were knocked offline by the storm.
Calpine, Talen Energy and TexGen Power are among the generators that support the PUC’s position.
