Texas Senate scrambles to advance bill that would force ERCOT to reprice energy charges from winter storm

Lt. Gov. Dan Patrick hastily convened a session of the Texas Senate on Monday as members suspended their own rules and took highly unusual steps to immediately push through a bill that would force the state’s utility regulator to reverse billions of dollars in charges for wholesale electricity during last month's winter storm.

Senate Bill 2142, sponsored by state Sen. Bryan Hughes, R-Mineola, had not even been filed when the day started Monday — and the full Senate hadn’t been scheduled to convene. But by 2 p.m., it had been read on the Senate floor, approved in a last-minute committee meeting that featured no public comment and then passed by the full Senate on a 27-3 vote.

Thanks to that extraordinary pace, it became the first bill that either chamber of the Legislature had passed since convening Jan. 12. It will now head to the House, where its fate is uncertain.

"The Senate has acted," Patrick said after Monday's vote. "We are asking the governor to join us. And I think if he will say he'll sign this bill, it may help us get this bill through the House."

The cost of electricity during the winter storm has emerged as a surprise hot-button issue in this year's legislative session after an independent market monitor estimated that the electric grid operator overbilled power companies by $16 billion around the time of last month's winter storm.

The Electric Reliability Council of Texas manages the market for electricity on the grid, controlling the price that power generators charge retail electricity providers such as power companies, city utilities and cooperatives. For days, ERCOT charged the maximum amount allowed for wholesale electricity — $9,000 per megawatt-hour — in order to incentivize generators to send power to the grid.

The monitor testified before the Senate Judiciary Committee last week that the cap was erroneously left in place for another 32 hours after the forced outages ended.

The Public Utility Commission, which regulates ERCOT, has so far refused to order a price adjustment. Abbott had previously named an investigation into “billing errors” as an emergency item for the Legislature.

The bill states that the PUC “has all necessary authority” to order ERCOT to reprice billions of dollars in charges after the state’s power grid operator imposed a cap on electricity prices during the winter storm. The measure says the PUC “shall” order ERCOT to correct the pricing and gives the PUC a deadline of March 20 to act.

"These charges, if they're allowed to stand because of this mistake, will be excessive," Hughes, the author, said on the Senate floor. "But it's important: They're not just excessive, they're wrong, they're inaccurate, that's not the accurate price."

It's not immediately clear how much the alleged overbilling will affect regular Texans or what impact the Senate legislation would have on people’s future electricity bills. Retail power providers buy power off the state market and then sell it to residential or commercial customers. At least some of the additional costs for the retail providers would seem likely to be passed on to consumers — a point Patrick made in a Monday press conference. But the financial hit varies by provider. And some retail providers also supply power to the grid, adding more to the uncertainty.

State Sen. Brandon Creighton, R-Conroe, who voted against the bill, suggested in a statement that the bill was a government overreach into the electricity marketplace.

"We need to reform ERCOT and the PUC, address the many failures that caused Texans to be without power in freezing temperatures last month, and identify ways to increase competition in the market so customers have the best rates," Creighton said. "SB 2142 does not accomplish any of that, and I don’t want to set a dangerous precedent that Texas is willing to force repricing or manipulate settled contracts — which will open the door to higher prices because of government overreach.”

The filing of SB 2142 came after Friday's deadline for submitting legislation for consideration during the 2021 legislative session. But the Senate found a way around that rule in one of its bolder procedural moves Monday. The chamber brought back up its motion to adjourn Thursday and withdrew it, essentially going back in time on the legislative calendar and allowing Hughes to file his legislation before the Friday deadline.

The move is the latest escalation in an uncomfortable dance between Patrick and Gov. Greg Abbott on the pricing issue and the leadership of the PUC. Patrick and most senators say they believe the prices should retroactively be brought down, and they have asked the PUC to do so. PUC and ERCOT leaders say the prices were intentionally left high to incentivize generators to send power during widespread outages. The PUC’s chair has said he doesn’t have authority to retroactively change the market price and has warned of unforeseen consequences of meddling in an electricity market that has already been settled.

State Sen. Joan Huffman, R-Houston, who chairs the committee that approved the bill earlier Monday, rebuffed the idea that repricing lies outside the PUC's authority.

"Though this is a non-amendatory legislation — which means we're not changing statutes and so forth — it does have the force of law," she said. "So by us enacting this legislation, we are telling the PUC this is not illegal."

The PUC’s sole serving member, Arthur D’Andrea, told the state Senate last week that he thinks it would be against the law to retroactively adjust prices. The other two spots on the PUC are vacant because their prior occupants resigned after the winter storm. Patrick has also called on D’Andrea to step down — and for Abbott to remove him if he doesn't.

Abbott has continued to stand behind D’Andrea, writing in a Friday letter to Patrick that “the only entity that can authorize the solution you want is the legislature itself.”

It's unclear how the bill passed Monday will fare in the House. While most senators have signaled an appetite to move quickly on the issue, members of the lower chamber have so far taken a more measured approach. If passed, it's unclear if Abbott would sign the bill.

One senator who voted against the bill, Sen. Kelly Hancock, R-North Richland Hills, expressed "sincere concerns" that the attempt to retroactively change the pricing runs afoul of the U.S. and Texas constitutions. Hancock last week filed his own slate of bills related to the energy grid, which he says are among "clearly constitutional options" for correcting the price dispute.

"Getting power to Texans when they need it most, and at a competitive rate, should in my view remain the main focus of legislative action."

Abbott raised a similar question Monday about the constitutionality of retroactively renegotiating contracted rates.

"These are very complex issues, and that's exactly why the Legislature is the right body to investigate this, to weed through all these complexities and to make sure that if legislation is passed, it will satisfy the requirements of the Texas Constitution," he said at a press conference in Houston.

Patrick, flanked by a bipartisan group of senators at a Monday afternoon press conference, downplayed concerns from Abbott and Hancock.

"Talking to our attorneys and the smart people behind me, we do not believe that is an issue," Patrick said. "And if it was an issue, it should have been brought up earlier when the emergency order was given to us."

And Patrick brushed off any suggestion that he was pushing the bill for political reasons or to pressure Abbott politically. Patrick has never been able to fully shake rumors that he is interested in the governor’s office, despite insisting he would never run against Abbott and repeatedly saying he plans to run for a third term as lieutenant governor in 2022.

He made that assertion again Monday, declaring, "“I am not running against Greg Abbott, OK?"

"He and I work very well together, we've had a very successful run together, and I don't think there's much daylight on this," Patrick said.

Patrick Svitek contributed reporting.