During the storm earlier this month, we saw electricity and gas prices jump to levels never seen before for more than a few hours during a billing period. Prices for electricity hit $9,000 per MWh, as opposed to the normal price of around $40.00. This maximum price has been reached before, but never for multiple days. Gas prices hit $300 per MCF during this time period, according to what we have heard.
This will affect different customers in different ways. Utility customers in the open market will have a large exposure if they were on a variable pricing contract. All of the contracts for our aggregation program are fixed price contracts, so this limits the exposure for those members. In theory, these customers should only pay their contracted rate, but some of the companies may try to use their “force-majeure” type clauses to surcharge their customers.
The PUC and Ercot are moving slowly with price settlements, and there is some discussion about the fact that the pricing signals did not operate correctly with the majority of the grid shut down. There will be a lot of litigation around this issue, and there has already been one power company declare bankruptcy due to the prices.
For Electric Cooperative and municipal customers, you will want to watch your bills to see if they pass through any of these costs. It would likely take place in the PCRF or a similar charge. MidAmerican had announced they will add a $0.345/kWh “Supplemental Ancillary” charge to all of their customers bills for February. This would result in a significant power bill for MidAmerican customers. This is the only company that has announced their intentions for the upcoming bill. After sending out this announcement however, MidAmerican walked this back, saying they will not pass through any adjustments until the PUC has their open meeting this week.
The PUC will be having an open meeting this week, and they will be looking at this issue. There is a chance that the PUC will be able to issue orders that will lower the impact of the week of the storm. Ercot or the courts may also end up ruling that the price will be settled at a different rate.
This issue is going to take a while to settle, and will be highly contentious. Please let us know if you receive an unusually high bill. Since the storm, there have been many bills filed at the legislature to address this issue. We will continue to watch this issue, and will keep you all posted as we learn more.